Sovereign debt restructuring : the Judge, the vultures and creditor rights

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Sovereign debt restructuring : the Judge, the vultures and creditor rights

Author Info

Miller, Marcus (Department of Economics, CEPR and CSGR, University of Warwick)
Thomas, Dania (CSGR, University of Warwick)

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Marcus H Miller

Abstract

What role did the US courts play in the Argentine debt swap of 2005? What implications does this have for the future of creditor rights in sovereign bond markets? The judge in the Argentine case has, it appears, deftly exploited creditor heterogeneity – between holdouts seeking capital gains and institutional investors wanting a settlement – to promote a swap with a supermajority of creditors. Our analysis of Argentine debt litigation reveals a ‘judge-mediated’ sovereign debt restructuring, which resolves the key issues of Transition and Aggregation - two of the tasks envisaged for the IMF’s still-born Sovereign Debt Restructuring Mechanism. For the future, we discuss how judge-mediated sovereign debt restructuring (together with creditor committees) could complement the alternative promoted by the US Treasury, namely collective action clauses in sovereign bond contracts

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Publisher Info
Paper provided by University of Warwick, Department of Economics in its series The Warwick Economics Research Paper Series (TWERPS) with number 757.

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Length: 27 pages
Date of creation: 2006
Date of revision:
Handle: RePEc:wrk:warwec:757

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Other versions of this item:

Article
- Marcus Miller & Dania Thomas, 2007. "Sovereign Debt Restructuring: The Judge, the Vultures and Creditor Rights," The World Economy, Blackwell Publishing, vol. 30(10), pages 1491-1509, October. [Downloadable!] (restricted)
Paper
- Miller, Marcus & Thomas, Dania, 2006. "Sovereign Debt Restructuring: the Judge, the Vultures and Creditor Rights," CEPR Discussion Papers 5710, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)

Find related papers by JEL classification:
F34 - International Economics - - International Finance - - - International Lending and Debt Problems
K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process
K49 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Other

This paper has been announced in the following NEP Reports:

NEP-ALL-2006-09-03 (All new papers)
NEP-CBA-2006-09-03 (Central Banking)
NEP-FMK-2006-09-03 (Financial Markets)
NEP-LAW-2006-09-03 (Law & Economics)

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

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Other versions:
- Kenneth Rogoff, 1999. "International Institutions for Reducing Global Financial Instability," NBER Working Papers 7265, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Sayantan Ghosal & Marcus Miller, 2003. "Co-ordination Failure, Moral Hazard and Sovereign Bankruptcy Procedures," Economic Journal, Royal Economic Society, vol. 113(487), pages 276-304, 04. [Downloadable!] (restricted)
Other versions:
- Ghosal, Sayantan & Miller, Marcus, 2003. "Coordination Failure, Moral Hazard and Sovereign Bankruptcy Procedures," CEPR Discussion Papers 3729, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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Other versions:
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

Kurtis Swope, Pamela Schmitt, John Cadigan and Robert Shupp, 2008. "An Experimental Study of the Holdout Problem in a Multilateral Bargaining Game," Departmental Working Papers 21, United States Naval Academy Department of Economics. [Downloadable!]

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