|Illing, Gerhard (2000): Bailing in the private sector - On the adequate design of international bond contracts. In: Intereconomics, Vol. 35, No. 2: pp. 64-71|
During the last decade, there has been a significant bias towards bond financing on emerging markets, with private investors relying on a bail-out of bonds by the international community. This bias has been a main cause of the recent excessive fragility of international capital markets. The following paper shows how collective action clauses in bonds contracts help to involve the private sector in risk-sharing. It argues that such clauses, as a market-based instrument, will raise the spreads for emerging market debt and so help to correct a market failure towards excessive bond finance. Recent pressure by the IMF to involve the private sector faces a conflict between the principle of honouring existing contracts and that of equal treatment of bondholders.
Economics > Chairs > Seminar for Macroeconomics
|Subjects:||300 Social sciences > 330 Economics|
|Deposited On:||15. Apr 2014 08:51|
|Last Modified:||29. Apr 2016 09:16|