A Journey in the History of Sovereign Defaults on Domestic Law Public Debt

We introduce a novel database on sovereign defaults that involve public debt instruments governed by domestic law. By systematically reviewing a large number of sources, we identify 132 default and restructuring events of domestic debt instruments, in 50 countries from 1980 to 2018. Domestic law defaults are a global phenomenon. Overtime, they have become larger and more frequent than foreign law defaults. Domestic law debt restructurings are achieved faster than foreign ones, often trough extensions of maturities and amendments to the coupon structure. Face value reductions are rare. Unilateral amendments and post-default restructuring are the norm, but negotiated pre-default restructurings are being increasingly used. Finally, we document that domestic defaults are widely heterogeneous. As such, we complement this paper with a collection of documents, named sovereign histories, that provide the fine details about each default episode.