Search Results

You are looking at 1 - 2 of 2 items for :

  • "VRI payout" x
Clear All
Charles Cohen, S. M. Ali Abbas, Anthony Myrvin, Tom Best, Mr. Peter Breuer, Hui Miao, Ms. Alla Myrvoda, and Eriko Togo
The COVID-19 crisis may lead to a series of costly and inefficient sovereign debt restructurings. Any such restructurings will likely take place during a period of great economic uncertainty, which may lead to protracted negotiations between creditors and debtors over recovery values, and potentially even relapses into default post-restructuring. State-contingent debt instruments (SCDIs) could play an important role in improving the outcomes of these restructurings.
Charles Cohen, S. M. Ali Abbas, Anthony Myrvin, Tom Best, Mr. Peter Breuer, Hui Miao, Ms. Alla Myrvoda, and Eriko Togo

-manipulation concerns. Indexation lags and links to highly persistent state variables should generally be avoided as they can erode the countercyclical properties of a SCDI. In this context there may be scope for the introduction of SCDIs linked to state variables that are outside of government control. In addition, linking the state variable to coupon payments rather than the principal smooths payments over time and reduces refinancing risk. Payout structure : Poorly designed payout structures may have serious consequences for sovereign borrowers. VRI payouts to creditors under