Sovereign debt restructuring in the Eurozone: A polanyian reading of private law enforcement

Thomas, Dania

doi:10.1108/s1059-4337(2013)0000062006

Cited by 3 publications

(7 citation statements)

References 4 publications

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“…Indebted sovereigns in crises across the Eurozone have made debt restructuring an imperative. Thomas (2013) proposed that the debt sustainability with negotiated and consensual workouts can be achieved in the Eurozone with statutory constraints on enforcement action pending the settlement of debt workouts.…”

Section: Literature Reviewmentioning

confidence: 99%

Implementation of Multi-Objective Evaluation Method in Public Debt Risk Management

Stankevičienė¹,

Rosov²

2013

EBER

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The paper is devoted to propose a public debt risk assessment model, which allows predicting country's economic well-being trends. The proposed model evaluates different aspects of public debt-related structural indicators. Research Design & Methods: Introduced debt risk assessment model uses MULTIMOORA multi-objective evaluation method. Study is based on the 2005-2010 European Union macroeconomic structural indicators. Findings: The data analysis indicates EU's ability to cope with the increasing level of public debt and predict long term fiscal consequences. Implications & Recommendations: Evaluation of research results enables to use multi-objective evaluation method to determine the risk of public debt. Contribution & Value Added: A ranking index which shows early warning signs of fiscal indebtedness problems for European Union countries is introduced in the paper. Periodical use of proposed model would help to predict incoming recessions and to implement specific fiscal policies in time to prevent them.

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Section: Literature Reviewmentioning

confidence: 99%

Implementation of Multi-Objective Evaluation Method in Public Debt Risk Management

Stankevičienė¹,

Rosov²

2013

EBER

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“…Italian persons and entities holding bonds for an aggregated nominal amount of $12 billion, 166 the Argentina Bondholders Committee representing institutional investors, the Argentine Bond Restructuring Authority for German, Austrian and Luxembourg retail investors, and Bank of Tokyo-Mitsubishi and Shinsei Bank representing Japanese bondholders. 167 Despite that the GCAB, according to its claims represented approximately 75 per cent of Argentine bonds held abroad, the Argentine government never recognised this committee and abstained from any official negotiations.…”

Section: Bondholders' Committees In the Modern Agementioning

confidence: 99%

“…The default of Ecuador left him without any savings in a state of limbo between his home country and Brazil, which denied him a residence permit for lack of funds and resulted in physical and mental sufferings bringing him nearly to committing suicide. 166 In Penades v the Republic of Ecuador, 167 there was no settlement offer coming from Ecuador, the lawsuit was decided on the merits and went through the appeal. The insurmountable obstacle for Penades' claims became the no-action clause of the 2030 Ecuador Bonds and its interpretation by the courts.…”

Section: Ecuador's Default Of 2008: Protection Of Small Investorsmentioning

confidence: 99%

“…165 Moreover, history shows that in time of crisis, the effectiveness of private law protections has always been subordinated by the imperative to achieve debt sustainability. 166 Therefore, it seems that sovereign debt restructuring, which restores debt sustainability is in the best interest of bondholders as they get a maximum amount available in actual circumstances. Furthermore, the bondholders benefit from the creation of the surplus by prompter borrower's recovery supported by the IMF programs.…”

Section: Sovereign Debt Sustainability Equals the Best Interest Of Bo...mentioning

confidence: 99%

“…This seems to corroborate the earlier point that investors do not favour trust structures for the limits they impose on their individual rights.In April 2003, EU member states agreed to lead by example by including CACs based on the framework developed by the G10 in their international debt issuance. 165 Among the 'core' clauses which the Member States and the Community were expected to use in implementing the EU commitment was a trust structure 166. However, as shown by an EU report one and a half years later, only a few member states had implemented trust structures, namely Finland, Ireland, Lithuania Slovakia, Spain, United Kingdom 167.…”

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Bond trustees and debt sustainability in sovereign debt restructuring

Pustovit¹

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The expansion of actors and instruments in sovereign debt markets through bond financing generated a coordination problem among bondholders during the debt restructuring process. There is a risk that an individual bondholder will be passive or act against the restructuring slowing down or even precluding the process of restructuring even though it is in the general interest of bondholders as a group, not to mention the population of the country experiencing the shortage of funds for public welfare. In particular, the disruptions to sovereign debt restructuring by frivolous litigation is considered as one of the main threats. This dissertation is the first major study devoted to sovereign bonds structured through a trust arrangement and the promising features that such a legal structure possesses for an effective and efficient sovereign debt restructuring. It provides a comprehensive inquiry into the evolution of the mechanisms to coordinate creditors, with a focus on bondholders and institutional frameworks which facilitated this coordination. It examines intriguing primary sources from League of Nations archives and provides in-depth case studies on the functionality of the trustees in sovereign bond restructurings performed by Argentina in 2016 and Ecuador in 2008. Assessing the utility of trust arrangements to address coordination problems, this thesis is driven by the puzzle: How to better balance (i) the need for smooth sovereign debt restructurings, which by definition entails some losses for creditors, with (ii) bondholders’ legitimate interests? What approach can be used in constructing a legal and institutional framework for trustees to promote the best interest of the bondholders in sovereign debt restructuring? As a solution, it seems that incentives for bond trustees to pursue debt sustainability will achieve both goals. In this regard, recognition of the concept of debt sustainability, being in substance the IMF and WB debt sustainability assessment, as the best interest of bondholders in sovereign debt restructuring is beneficial from multiple aspects. It enables a bond trustee to excel in its role as a guardian of bondholders by following the best interest of bondholders in exercising its discretion. Moreover, it fosters an equilibrium between the interests of private creditors and a state taking into account its socio-political aspects.

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After a romantic aspiration to society: Harnessing the regulatory capacity of a social sphere

Lange¹

2013

From Economy to Society? Perspectives on Transnational Risk Regulation

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Sovereign debt restructuring in the Eurozone: A polanyian reading of private law enforcement

Cited by 3 publications

References 4 publications

Implementation of Multi-Objective Evaluation Method in Public Debt Risk Management

Implementation of Multi-Objective Evaluation Method in Public Debt Risk Management

Bond trustees and debt sustainability in sovereign debt restructuring

After a romantic aspiration to society: Harnessing the regulatory capacity of a social sphere

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