Debt Buybacks Signal Sovereign Countries' Creditworthiness: Theory and Tests
The authors show that debt buybacks could convey valuable information about indebted countries' willingness to invest and increase debt repayment when creditors are less informed than debtors. In an informational equilibrium, unwilling countries do not repurchase a part of their debt, but willing countries do; and creditors increase debt repayments by offering reliefs only to those countries that repurchase. Data show that creditors systematically grant debt reliefs only to countries with buyback programs; and a country's secondary market debt price is higher when it has a buyback program than if it does not. Copyright 1993 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.
Volume (Year): 34 (1993)
Issue (Month): 4 (November)
|Contact details of provider:|| Postal: 160 McNeil Building, 3718 Locust Walk, Philadelphia, PA 19104-6297|
Phone: (215) 898-8487
Fax: (215) 573-2057
Web page: http://www.econ.upenn.edu/ier
More information through EDIRC
|Order Information:|| Web: http://www.blackwellpublishing.com/subs.asp?ref=0020-6598 Email: |
When requesting a correction, please mention this item's handle: RePEc:ier:iecrev:v:34:y:1993:i:4:p:795-817. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing)or ()
If references are entirely missing, you can add them using this form.