Publication:

A journey in the history of sovereign defaults on domestic law public debt

We introduce a novel database on sovereign defaults that involve public debt instruments governed by domestic law. By systematically reviewing a large number of sources, we identify 132 default and restructuring events of domestic debt instruments, in 50 countries from 1980 to 2018. Domestic-law defaults are a global phenomenon. Over time, they have become larger and more frequent than foreign-law defaults. Domestic-law debt restructurings are achieved faster than foreign ones, often through extensions of maturities and amendments to the coupon structure. While face value reductions are rare, net-present-value losses for creditors are still large. Unilateral amendments and post-default restructuring are the norm, but negotiated pre-default restructurings are becoming increasingly frequent. Finally, we document that domestic defaults are widely heterogeneous and we complement our analysis with a collection of documents, named ‘sovereign histories’, that provide the fine details about each default episode.