Illustrative Effects Of Voluntary Debt And Debt Service Reduction Operations

Download or read book Illustrative Effects of Voluntary Debt and Debt Service Reduction Operations written by Ruben Lamdany and published by . This book was released on 1989 with total page 60 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper discusses the potential effects of voluntary debt and debt service reduction operations supported by multilateral agencies and governments of creditor countries. The paper considers alternative financial structures for these operations : buy-backs, par and discounted debt exchanges and concessional debt restructurings. The note concludes that for relatively small market based operations, the overall benefits to the country under those alternative structures are likely to be very similar. Tax and regulatory benefits as well as the possibility of creating some degree of seniority for exit bonds, could enhance the benefits obtained through debt exchanges relative to buy-backs. Concessional loan restructurings are the most difficult to evaluate, because the outcome hinges on the determinants of the bargaining strength of each side, as well as on the economics of debt reduction.