On the Pricing of LDC Debt [E-Book]: An Analysis Based on Historical Evidence from Latin America / Béatriz de Aghion
de Aghion, Béatriz.
Paris : OECD Publishing, 1992
23 p. ; 21 x 29.7cm.
OECD Development Centre Working Papers ; 52
Full Text
This paper displays and discusses historical data on sovereign debt prices for two Latin American countries and provides a signalling framework to account for the following phenomena: (a) prices for old (defaulted) and newly-issued debts were the same, but such prices diverge and rise sharply once the countries stopped issuing new foreign debt, and, (b) the price of defaulted and newly issued debts both tend to rise as the latter approaches maturity and the country starts redeeming all its outstanding obligations. The analysis sheds some light on the valuation of different debt instruments in today's secondary market for LDC debt ...