Valuation of Menu Items in Debt Restructuring

16 Pages Posted: 15 Feb 2006

See all articles by Steven Symansky

Steven Symansky

International Monetary Fund (IMF) - Fiscal Affairs Department

Ralph W. Tryon

Government of the United States of America - Division of International Finance (IFDP)

Date Written: September 8, 1989

Abstract

This paper outlines a procedure for calculating the cash value of "menu items" in debt restructuring proposals, including par and non-par exchanges, with enhancements consisting of either interest or principal guarantees. It is argued that under certain plausible assumptions interest and principal guarantees are directly equivalent to cash buy-backs. Using these assumptions, formulas to calculate the exchange ratios, resource requirements, interest rates, and net debt reduction for particular menu items are derived. It is shown that there is not a direct relationship between the exchange discount and the market price.

JEL Classification: 433, 440

Suggested Citation

Symansky, Steven and Tryon, Ralph, Valuation of Menu Items in Debt Restructuring (September 8, 1989). IMF Working Paper No. 89/69, Available at SSRN: https://ssrn.com/abstract=884936

Steven Symansky (Contact Author)

International Monetary Fund (IMF) - Fiscal Affairs Department ( email )

700 19th Street, NW
Washington, DC 20431
United States

Ralph Tryon

Government of the United States of America - Division of International Finance (IFDP) ( email )

Stop 24
Washington, DC 20551
United States
202-452-2368 (Phone)
202-736-5638 (Fax)

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