The Securitisation of Developing Country Bank Debt

Abstract

This chapter is about the securitisation of the bank debt of countries which have encountered difficulties since 1982 in servicing their external obligations. The chapter is structured so as to analyse the motivation for creditors and debtors to participate in securitisation arrangements. In contrast with the securitisation of other bank loans, the securitisation of developing country debt is closely bound up with issues of impaired creditworthiness and debt relief. In discussing such securitisation, which to date has been very limited in scope, the chapter seeks to separate those avenues of the market which participants might voluntarily and without outside intervention seek to explore from those which they may be reluctant to pursue.²

Peter Stanyer was working at the International Division, Bank of England, when this paper was written. This paper has benefited from the comments of colleagues in the Bank’s International Division and from discussion with participants in the secondary market for bank claims on developing countries. However, the views expressed are those of the author alone.