Preferred and Non-Preferred Creditors
International financial institutions (IFIs) generally enjoy preferred creditors treatment (PCT). Although PCT rarely appears in legal contracts, when sovereigns restructure bilateral or commercial debts they normally pay IFIs in full. This paper pr...
Main Authors: | , |
---|---|
Format: | Working Paper |
Language: | English |
Published: |
World Bank, Washington, DC
2019
|
Subjects: | |
Online Access: | http://documents.worldbank.org/curated/en/578451563797490303/Preferred-and-Non-Preferred-Creditors http://hdl.handle.net/10986/32125 |
id |
okr-10986-32125 |
---|---|
recordtype |
oai_dc |
spelling |
okr-10986-321252022-08-16T00:24:00Z Preferred and Non-Preferred Creditors Cordella, Tito Powell, Andrew PREFERRED CREDITOR TREATMENT PREFERRED CREDITOR STATUS SOVEREIGN DEBT DEFAULTS INTERNATIONAL FINANCIAL INSTITUTIONS EMERGENCY FINANCING DEBT RESTRUCTURING FINANCIAL MARKETS International financial institutions (IFIs) generally enjoy preferred creditors treatment (PCT). Although PCT rarely appears in legal contracts, when sovereigns restructure bilateral or commercial debts they normally pay IFIs in full. This paper presents a model where a creditor, such as an IFI, that can commit to lend limited amounts at the risk-free rate and can refrain from lending into arrears is always repaid and adds value. The analysis suggests that IFIs should not mimic commercial lenders, but exploit their complementarity, even if banning commercial borrowing can sometimes be optimal. IFIs should also focus on countries with limited market access and should not be forced into debt restructurings. 2019-07-29T17:29:46Z 2019-07-29T17:29:46Z 2019-07 Working Paper http://documents.worldbank.org/curated/en/578451563797490303/Preferred-and-Non-Preferred-Creditors http://hdl.handle.net/10986/32125 English Policy Research Working Paper;No. 8941 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper |
repository_type |
Digital Repository |
institution_category |
Foreign Institution |
institution |
Digital Repositories |
building |
World Bank Open Knowledge Repository |
collection |
World Bank |
language |
English |
topic |
PREFERRED CREDITOR TREATMENT PREFERRED CREDITOR STATUS SOVEREIGN DEBT DEFAULTS INTERNATIONAL FINANCIAL INSTITUTIONS EMERGENCY FINANCING DEBT RESTRUCTURING FINANCIAL MARKETS |
spellingShingle |
PREFERRED CREDITOR TREATMENT PREFERRED CREDITOR STATUS SOVEREIGN DEBT DEFAULTS INTERNATIONAL FINANCIAL INSTITUTIONS EMERGENCY FINANCING DEBT RESTRUCTURING FINANCIAL MARKETS Cordella, Tito Powell, Andrew Preferred and Non-Preferred Creditors |
relation |
Policy Research Working Paper;No. 8941 |
description |
International financial institutions
(IFIs) generally enjoy preferred creditors treatment (PCT).
Although PCT rarely appears in legal contracts, when
sovereigns restructure bilateral or commercial debts they
normally pay IFIs in full. This paper presents a model where
a creditor, such as an IFI, that can commit to lend limited
amounts at the risk-free rate and can refrain from lending
into arrears is always repaid and adds value. The analysis
suggests that IFIs should not mimic commercial lenders, but
exploit their complementarity, even if banning commercial
borrowing can sometimes be optimal. IFIs should also focus
on countries with limited market access and should not be
forced into debt restructurings. |
format |
Working Paper |
author |
Cordella, Tito Powell, Andrew |
author_facet |
Cordella, Tito Powell, Andrew |
author_sort |
Cordella, Tito |
title |
Preferred and Non-Preferred Creditors |
title_short |
Preferred and Non-Preferred Creditors |
title_full |
Preferred and Non-Preferred Creditors |
title_fullStr |
Preferred and Non-Preferred Creditors |
title_full_unstemmed |
Preferred and Non-Preferred Creditors |
title_sort |
preferred and non-preferred creditors |
publisher |
World Bank, Washington, DC |
publishDate |
2019 |
url |
http://documents.worldbank.org/curated/en/578451563797490303/Preferred-and-Non-Preferred-Creditors http://hdl.handle.net/10986/32125 |
_version_ |
1764475839846547456 |