Hidden Defaults
China’s lending boom to developing countries is morphing into defaults and debt distress. Given the secrecy surrounding China’s loans, also the associated defaults remain “hidden”, as missed payments and restructuring details are not disclosed. Thi...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2022
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/773311643912553263/Hidden-Defaults http://hdl.handle.net/10986/36965 |
| Summary: | China’s lending boom to developing
countries is morphing into defaults and debt distress. Given
the secrecy surrounding China’s loans, also the associated
defaults remain “hidden”, as missed payments and
restructuring details are not disclosed. This paper
constructs an encompassing dataset of sovereign debt
restructurings with Chinese lenders and finds that these
credit events are surprisingly frequent, exceeding the
number of sovereign bond or Paris Club restructurings.
Chinese lenders follow a resolution approach reminiscent of
1980s Western lenders; they seldom provide deep debt relief
with face value reduction. If history is any guide,
multi-year debt workouts with serial restructurings lie in store. |
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