Abstract
This chapter provides a brief outline of the perceived causes and development of the debt crisis and describes the most relevant product-related institutional aspects of rescheduling country lending. Finally, those innovations are presented which will be the subject of further analysis in chapter 5.
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References
V. section 4.5.1.
V. section 3.2.3.
In late 1988 a menu approach was also applied to official credit relationships between sovereign creditors of the Paris Club and seven African debtor countries. Elements of this menu are (1) partial cancellation of debt, (2) extended maturities, and (3) concessional interest rates (IMF Survey [1989, 103]).
A very detailed treatment of syndicated lending is provided by McDonald [1982].
V. section 3.2.3.1.
Sometimes commercial banks involved in rescheduling negotiations are referred to as the “London Club”.
Other terms used include “bank advisory group” and “bank working committee”.
Described in more detail in section 4.1.1.7.
In new money agreements such mutual dependence has also been established with official lenders like the IMF or industrial country governments by making these agreements conditional on according agreements with commercial banks and other tie-ins.
The following description relies primarily on UNCTC [1983] and Bucheit/Reisner [1988]. V. also Messer [1989, 39seqq.].
Events of default clauses specify exactly what events give rise to triggering a default. Cf. Messer [1989, 43seqq.].
V. Messer [1989, 69seq.]
V. section 3.3.1.3.
For case exampies of these various transaction modes v. Messer [1989, 91seqq.]. An account of the procedural details for their effectuation can be found ibid. [135seqq.].
The following brief overview of transfer modes draws heavily on the much more detailed treatment in Wulfken/Berger [1988].
Also French law applies to loan contracts of a few debtor countries, particularly in Africa. However, for the vast majority of rescheduling countries mainly New York law and — less so — English law are relevant.
Based on information from market participants. Double counting of transactions makes these figures somewhat vague.
Cf. table 1 on p. 2.
Cf. section 4.4.
For detailed treatments of debt equity swaps v. Rubin [1987] and Wulfken [1989].
For an economic analysis of debt equity swaps v. Franke [1989a].
For further reference v. Roth [1989] and Berger [1988, 128].
In the most prominent case of a debt for bond swap the Mexican government issued US$ 10 billion of 20 year bonds with an interest rate spread of l5/8% over LIBOR p.a. in exchange for US$ 14.3 billion of old debt at 13/i6% over LIBOR p.a. For a detailed analysis of this transaction v. Ebenroth/Cremer [1988].
This is the conclusion of a statement of principles on the protection of tropical rain forests by the Commission of the European Community (FAZ [1. August 1989]).
For detailed treatments v. Hansen [1989] and Chamberlin/Gruson/Weltchek [1988, 440seqq.]. Debt for nature swaps have been conducted in Bolivia, Ecuador, Costa Rica, and in the Philippines (ibid.).
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© 1990 Betriebswirtschaftlicher Verlag Dr. Th. Gabler GmbH, Wiesbaden
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Berger, W. (1990). The Evolution of Innovations in International Debt Management. In: Financial Innovations in International Debt Management. nbf Neue Betriebswirtschaftliche Forschung, vol 73. Gabler Verlag. https://doi.org/10.1007/978-3-322-89330-7_3
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DOI: https://doi.org/10.1007/978-3-322-89330-7_3
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