Default and Renegotiation of Latin American Foreign Bonds in the Interwar Period

Erika Jörgensen · Jeffrey David Sachs

73 citations0/0 files storedNational Bureau of Economic Research

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Abstract

This paper examines the patterns of defaults, renegotiations, and final settlements on foreign borrowing of several Latin American governments in the interwar period.One goal of the paper is to provide a detailed historical account of the borrowing and renegotiation experience of five Latin borrowers (Argentina, Bolivia, Chile, Colombia, and Peru).Another goal is to provide a quantitative assessment of the amount of debt relief that was implicit in the negotiated settlements of the defaults that were reached in the 1930s and l940s.In general, the pattern of default and renegotiation resulted in substantial, though not complete, debt relief, in the sense of reducing the present value of debt repayments from the sovereign borrower to the bondholders,

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References

1985Sovereign Debt as a Contingent Claim: Excusable Default, Repudiation, and Reputation 1985Lessons from the past: capital markets during the 19th century and the interwar period 1974The World Bank Since Bretton Woods.1989How Sovereign Debt Has Worked 1974The World Bank Since Bretton Woods.2000State insolvency and foreign bondholders.1987U.S. Commercial Banks and the Developing-Country Debt Crisis

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