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On the Pricing of LDC Debt: An Analysis Based on Historical Evidence from Latin America

Listed author(s):
  • Béatriz Armendariz de Aghion

This paper displays and discusses historical data on sovereign debt prices for two Latin American countries and provides a signalling framework to account for the following phenomena: (a) prices for old (defaulted) and newly-issued debts were the same, but such prices diverge and rise sharply once the countries stopped issuing new foreign debt, and, (b) the price of defaulted and newly issued debts both tend to rise as the latter approaches maturity and the country starts redeeming all its outstanding obligations. The analysis sheds some light on the valuation of different debt instruments in today's secondary market for LDC debt ... Ce texte expose et étudie les données historiques de deux pays d'Amérique latine sur le marché secondaire et propose un modèle de signalling pour rendre compte des phénomènes suivants : (a) les prix des dettes anciennes non honorées et des dettes récentes sont identiques mais de tels prix divergent et augmentent sensiblement dès que les pays cessent de contracter de nouvelles dettes et, (b) le prix des dettes anciennes non honorées et celui des dettes récentes a tendance à s'élever à mesure que ces dernières arrivent à échéance et que le pays commence à se libérer de ses engagements. L'analyse apporte des éclaircissements sur l'évaluation des différents instruments actuels de la dette sur le marché secondaire des pays en développement les moins avancés ...

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Paper provided by OECD Publishing in its series OECD Development Centre Working Papers with number 52.

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Date of creation: 01 Feb 1992
Handle: RePEc:oec:devaaa:52-en
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