Default-risky Sovereign Debt

Arbeitspapier

Not only corporate but also sovereign debtors, in particular developing countries, may get into financial difficulties. Contrary to corporate issuers, they decide themselves if they continue to fulfill their debt obligations or convert their debt. I analyze the value of a default-risky sovereign bond in a setting in which foreign trade is reduced in case the country does not fulfill its obligations. Comparing the costs of debt service with the value of the punishment via foreign trade, the country voluntarily decides when to reorganize its debt. Knowing this threshold the value of a sovereign coupon-bond can be calculated.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Bonn Econ Discussion Papers ; No. 36/2002

Classification and Topics

• Classification: Wirtschaft ; International Financial Markets ; Bankruptcy; Liquidation ; International Lending and Debt Problems ; National Debt; Debt Management; Sovereign Debt
• Subject: Credit risk ; sovereign debt ; endogenous default ; Internationale Anleihe ; Länderrisiko ; Wertpapieranalyse ; Umschuldung ; Sanktion ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Wiggers, Andreas
• Event: Veröffentlichung
• (who): University of Bonn, Bonn Graduate School of Economics (BGSE)
• (where): Bonn
• (when): 2002

Further information

• Handle: http://hdl.handle.net/10419/22857
• Last update: 10.03.2025, 11:44 AM CET