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

Jorgensen, Erika; Sachs, Jeffrey D.

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 1940s. 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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Academic Units
Earth Institute
Publisher
National Bureau of Economic Research
Series
NBER Working Paper, 2636
Published Here
September 29, 2009

Notes

Paper prepared for the conference on "A Long-Run Perspective on the Debt Crisis," May 27, 1988 at the Federal Reserve Bank of San Francisco. Published as part of A Long Run Perspective on the Debt Crisis (Cambridge: MIT University Press, 1989).

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