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Federal Reserve Bank of Minneapolis
The Seniority Structure of Sovereign Debt
Sovereign governments owe debt to many foreign creditors and can choose which creditors to favor when making payments. This paper documents the de facto seniority structure of sovereign debt using new data on defaults (missed payments or arrears) and creditor losses in debt restructuring (haircuts). We overturn conventional wisdom by showing that official bilateral (government-to-government) debt is junior, or at least not senior, to private sovereign debt such as bank loans and bonds. Private creditors are typically paid first and lose less than bilateral official creditors. We confirm that multilateral institutions like the IMF and World Bank are senior creditors.
Cite this item
Matthias Schlegl & Christoph Trebesch & Mark L. J. Wright, The Seniority Structure of Sovereign Debt, Federal Reserve Bank of Minneapolis, Working Papers 759, 30 May 2019.
- F30 - International Economics - - International Finance - - - General
- F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
- F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General
- G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
Keywords: Sovereign default; Arrears; Insolvency; Priority; IMF; Official debt; Sovereign bonds; International financial architecture; Pecking order
This item with handle RePEc:fip:fedmwp:759
is also listed on EconPapers
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