The Seniority Structure of Sovereign Debt

63 Pages Posted: 14 May 2019

See all articles by Matthias Schlegl

Matthias Schlegl

Ludwig Maximilian University of Munich, Faculty of Economics

Christoph Trebesch

Kiel Institute for the World Economy; Centre for Economic Policy Research (CEPR)

Mark L. J. Wright

Federal Reserve Banks - Federal Reserve Bank of Minneapolis

Multiple version iconThere are 2 versions of this paper

Date Written: 2019

Abstract

Sovereign governments owe debt to many foreign creditors and can choose which creditors to favor when making payments. This paper documents the de facto seniority structure of sovereign debt using new data on defaults (missed payments or arrears) and creditor losses in debt restructuring (haircuts). We overturn conventional wisdom by showing that official bilateral (government-to-government) debt is junior, or at least not senior, to private sovereign debt such as bank loans and bonds. Private creditors are typically paid first and lose less than bilateral official creditors. We confirm that multilateral institutions such as the IMF and World Bank are senior creditors.

Suggested Citation

Schlegl, Matthias and Trebesch, Christoph and Wright, Mark L.J., The Seniority Structure of Sovereign Debt (2019). CESifo Working Paper No. 7632. Available at SSRN: https://ssrn.com/abstract=3387668

Matthias Schlegl (Contact Author)

Ludwig Maximilian University of Munich, Faculty of Economics ( email )

Germany

Christoph Trebesch

Kiel Institute for the World Economy ( email )

P.O. Box 4309
Kiel, D-24100
Germany

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Mark L.J. Wright

Federal Reserve Banks - Federal Reserve Bank of Minneapolis ( email )

90 Hennepin Avenue
Minneapolis, MN 55480
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
16
Abstract Views
46
PlumX Metrics
!

Under construction: SSRN citations while be offline until July when we will launch a brand new and improved citations service, check here for more details.

For more information