A Noteon Burden Sharing Among Creditors

By Michael P. Dooley, Richard D Haas, Steven A. Symansky

March 1, 1992

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Michael P. Dooley, Richard D Haas, and Steven A. Symansky A Noteon Burden Sharing Among Creditors, (USA: International Monetary Fund, 1992) accessed December 22, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper presents a framework for evaluating the relative contributions of different creditors in cases where only partial payments can be made by the debtor country. A methodology is developed to calculate partial payments—or alternatively put—determine residual financing. By focusing on the relative seniority of creditors and expectations of the debtor’s ability to repay, alternative sharing rules are quantified. The measure is based on the expected present value of payments. Creditors earning a below-market rate of return suffer a burden; creditors earning the same rate of return are said to share the burden equally.

Subject: Bonds, Currencies, Debt reduction, Interest payments, Private debt

Keywords: Debt service, Debtor country, Market value, New money, Value, WP

Publication Details

Pages:

28
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1992/021
Stock No:

WPIEA0211992
ISBN:

9781451921502
ISSN:

1018-5941

Notes

Also published in Staff Papers, Vol. 40, No. 1, March 1993.

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