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'Secret' buy-backs of LDC debt

'Secret' buy-backs of LDC debt
'Secret' buy-backs of LDC debt
We analyze the buy-back of its debt by an LDC. Contrary to previous analyses of this subject, we assume that the debtor can hide its transactions behind the veil of a fictitious operator: the banks, we assume, cannot discriminate intra-bank transactions from buy-backs by the debtor itself. With this assumption, the lenders set the price by (rationally) taking account of the country's incentive to repurchase its debt. Will the debtor undertake a buy-back of its debt? The answer is a qualified yes. Large buy-backs will take place.
buy-back, ldc debt
0022-1996
317-334
Cohen, Daniel
2d905cfa-2491-40f5-87d0-5b56eed9a2dd
Verdier, Thierry
87c483ea-f473-408f-9776-d0381cab6454
Cohen, Daniel
2d905cfa-2491-40f5-87d0-5b56eed9a2dd
Verdier, Thierry
87c483ea-f473-408f-9776-d0381cab6454

Cohen, Daniel and Verdier, Thierry (1995) 'Secret' buy-backs of LDC debt. Journal of International Economics, 39 (3-4), 317-334. (doi:10.1016/0022-1996(95)01372-9).

Record type: Article

Abstract

We analyze the buy-back of its debt by an LDC. Contrary to previous analyses of this subject, we assume that the debtor can hide its transactions behind the veil of a fictitious operator: the banks, we assume, cannot discriminate intra-bank transactions from buy-backs by the debtor itself. With this assumption, the lenders set the price by (rationally) taking account of the country's incentive to repurchase its debt. Will the debtor undertake a buy-back of its debt? The answer is a qualified yes. Large buy-backs will take place.

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More information

Published date: November 1995
Keywords: buy-back, ldc debt

Identifiers

Local EPrints ID: 33465
URI: http://eprints.soton.ac.uk/id/eprint/33465
DOI: doi:10.1016/0022-1996(95)01372-9
ISSN: 0022-1996
PURE UUID: 74eef740-aa21-4a54-93d1-389bbe799fcd

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Date deposited: 14 Dec 2007
Last modified: 15 Mar 2024 07:44

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Contributors

Author: Daniel Cohen
Author: Thierry Verdier

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