Sturzenegger zettelmeyer debt defaults and lessons from a decade of crises (2006)

economics “Sovereign debt crises are like severe earthquakes: they occur frequently enough to make them objects of fear and persistent foreboding, but not so frequently as to permit easy collation and analysis Federico Sturzenegger and Jeromin Zettelmeyer have provided a succinct, highly readable summary of each of the major sovereign debt restructurings of the last seven years From these episodes they have gleaned the essential features—from both an economic and a legal perspective—that shaped each crisis and facilitated (or retarded) its eventual resolution This is a superb distillation of what we have learned to date about how to respond to sovereign debt dificulties.” —Lee Buchheit, Cleary Gottlieb Steen & Hamilton LLP “The authors have written a most valuable book on the sovereign debt crises of the 1990s Their analysis is thorough, scholarly, and attentive to detail and nuance This will be an original and important contribution to the ield.” —Nouriel Roubini, Stern School of Business, New York University the mit press Massachusetts Institute of Technology Cambridge, Massachusetts 02142 http://mitpress.mit.edu 0-262-19553-4 978-0-262-19553-9 cover art: Jerico, 1997, by Alfredo Prior Courtesy of Joseina Rouillet and Federico Sturzenegger Debt Defaults and Lessons from a Decade of Crises Debt Defaults and Lessons from a Decade of Crises “Few books manage to be both accessible and useful to diverse audiences, but Sturzenegger and Zettelmeyer have done it With the right blend of academic insight, case studies, and policy discussion, each feeding off of the others, their book conveys plenty of wisdom and surprises Academics, policymakers, and anyone interested in emerging markets or international inancial architecture should read it.” —Ricardo Caballero, Ford International Professor of Economics, MIT sturzenegger and zettelmeyer Federico Sturzenegger is Visiting Professor of Public Policy at the John F Kennedy School of Government, Harvard University, and Professor at the Universidad Torcuato di Tella, Buenos Aires Jeromin Zettelmeyer is Assistant to the Director of the Western Hemisphere Department at the International Monetary Fund Debt Defaults and Lessons from a Decade of Crises Federico Sturzenegger and Jeromin Zettelmeyer Federico Sturzenegger and Jeromin Zettelmeyer The debt crises in emerging market countries over the past decade have given rise to renewed debate about crisis prevention and resolution In Debt Defaults and Lessons from a Decade of Crises, Federico Sturzenegger and Jeromin Zettelmeyer examine the facts, the economic theory, and the policy implications of sovereign debt crises They present detailed case histories of the default and debt crises in seven emerging market countries between 1998 and 2005: Russia, Ukraine, Pakistan, Ecuador, Argentina, Moldova, and Uruguay These accounts are framed with a comprehensive overview of the history, economics, and legal issues involved and a discussion from both domestic and international perspectives of the policy lessons that can be derived from these experiences Sturzenegger and Zettelmeyer examine how each crisis developed, what the subsequent restructuring encompassed, and how investors and the defaulting country fared They discuss the new theoretical thinking on sovereign debt and the ultimate costs entailed, for both debtor countries and private creditors The policy debate is considered irst from the perspective of policymakers in emerging market countries and then in terms of international inancial architecture The authors’ surveys of legal and economic issues associated with debt crises, and of the crises themselves, are the most comprehensive to be found in the literature on sovereign debt and default, and their theoretical analysis is detailed and nuanced The book will be a valuable resource for investors as well as for scholars and policymakers Debt Defaults and Lessons from a Decade of Crises Debt Defaults and Lessons from a Decade of Crises Federico Sturzenegger and Jeromin Zettelmeyer The MIT Press Cambridge, Massachusetts London, England ( 2006 Massachusetts Institute of Technology All rights reserved No part of this book may be reproduced in any form by any electronic or mechanical means (including photocopying, recording, or information storage and retrieval) without permission in writing from the publisher MIT Press books may be purchased at special quantity discounts for business or sales promotional use For information, please email special_sales@mitpress.mit.edu or write to Special Sales Department, The MIT Press, 55 Hayward Street, Cambridge, MA 02142 This book was set in Palatino on 3B2 by Asco Typesetters, Hong Kong Printed and bound in the United States of America Library of Congress Cataloging-in-Publication Data Sturzenegger, Federico Debt defaults and lessons from a decade of crises / Federico Sturzenegger, Jeromin Zettelmeyer p cm Includes bibliographical references and index ISBN-13: 978-0-262-19553-9 (hardcover : alk paper) ISBN-10: 0-262-19553-4 (hardcover : alk paper) Debts, External—Developing countries Debt relief—Developing countries Developing countries—Economic policy I Zettelmeyer, Jeromin II Title HJ8899.S83 2007 2006027582 336.3 435091724—dc22 10 To the memory of Rudi Dornbusch Our teacher and friend Contents Preface ix Acknowledgments and Disclaimer xi I History, Economics, and Law Sovereign Defaults and Debt Restructurings: Historical Overview The Economics of Sovereign Debt and Debt Crises: A Primer 31 Legal Issues in Sovereign Debt Restructuring II The New Debt Crises, 1998–2005 Introduction 85 Russia 91 Ukraine 115 Pakistan 135 Ecuador 147 Argentina Moldova 165 203 83 55 viii Contents 10 Uruguay 211 Afterword: The Dominican Republic 227 III Policy 231 11 Debt Crises from the Perspective of an Emerging Market Economy Policymaker 233 12 International Financial Architecture 269 Appendix: Tools for the Analysis of Debt Problems Notes 329 References 345 Index 365 297 Preface The 1980s were supposed to be the time of ‘‘the’’ debt crisis But since the tequila crisis in 1995, and particularly after the 1998 Russian default, questions related to sovereign debt have once again been at the forefront of policy discussions about emerging market economies For the first time since the 1930s, a series of crises and restructurings have taken place that focused on sovereign bonds Each crisis has given rise to new debates about crisis prevention and resolution, moral hazard, globalization hazard, and the international financial architecture They have also given impetus to a large new literature on economic and legal aspects of sovereign debt The purpose of this monograph is to give an account of the past decade of sovereign debt and debt crises in emerging market countries, at three levels First, the facts How did the crises develop? What was restructured, and on what terms? How did investors fare, and how did countries emerge from the crisis? Second, the new thinking on sovereign debt and debt crises How risky debt structures arise? What are the fundamental causes of costly debt crises? Why are crises costly and what are the costs, for both debtor countries and investors? Finally, the policy debate, with particular attention on the perspective of the emerging market policymaker What are appropriate prevention measures? How should a restructuring be implemented? How can an economic collapse following a debt crisis be avoided? And at the international level, how can the financial architecture provide a safety net that protects debtor countries and investors and, at the same time, imparts good incentives to countries and capital markets alike? This book stands on the shoulders of a tradition in economics and law, going back to the nineteenth century that has periodically reflected on the causes and consequences of sovereign debt crises Bill Cline’s fine account of the debt crisis of the 1980s, International Debt 372 Index Defaults (cont.) permanent exclusion and, 32 policymakers and, 249–268 ‘‘race to the courthouse’’ and, 74–76 Russia and, 99–101, 104–113 selective, 139–140, 178 sovereign immunity and, 3, 31–36 sustaining economy and, 249–255 technical, 44 Ukraine and, 128 wars and, 4–5 willingness-to-pay problem and, 36–38 De Gregorio, Jose´, 280 Dell’Ariccia, Giovanni, 51 Delos Temple, Depreciation, 37, 40–41, 214 Detragiache, Enrica, 44, 46 Deutsche Bank, 174 Devaluation See Currency issues Dia´z Alvarado, Carlos, 308 Diplomatic representations, 20–21 Directed punishments, 33 Dollarization, 41, 188, 219, 221 dedollarization and, 236–242 Ecuador and, 155–157 fight/postponement decisions and, 244 private financial sector and, 236–237 public debt structures and, 237 Uruguay and, 211, 213 Dominican Republic, 16, 20, 62, 227–229, 324 Dooley, Michael P., 53 Drazen, Allan, 251 Dubai guidelines, 187–188, 196 Duffie, Darrell, 91 Duhalde, Eduardo, 182 Dujovne, Nicola´s, 241 Durlesteanu, Mariana, 206 Easterly, William, Eaton, Jonathan, 31–33, 35, 44, 48 Economist, The, 192 Ecuador, 85–86, 90, 216, 298 banks and, 147, 150–154 bonds and, 155–164 Brady Plan and, 155–156, 158 Central Bank of, 147, 150–151 currency issues and, 147, 150–151, 155– 157 debt deals and, 265–266 debt exchange and, 157–164 dollarization and, 155–157 El Nin˜o and, 151, 240, 244 Emerging Markets Traders Association (EMTA) and, 158 equity swaps for, 158–159 fight/postponement decisions and, 244, 246 haircuts and, 160 historical restructurings and, 9, 16, 19, 25 interest rates and, 156 international financial architecture and, 281 International Monetary Fund (IMF) and, 147, 150–151, 155, 157–158 legal issues and, 60–62 Luxembourg Stock Exchange and, 160 Mahuad and, 156 Noboa and, 156–157 official development assistance (ODA) loans and, 160, 163 oil prices and, 151 Paris Club and, 147, 160–161 policymakers and, 233 politics and, 156–157 Stand-by Arrangement and, 157 Egypt, 4, 16, 19–21, 27 Eichenbaum, Martin, 41 Eichengreen, Barry debt crises and, 36, 268 historical restructurings and, 11, 15, 19– 21, 26 international financial architecture and, 274, 292–293 legal issues and, 77 policy and, 268 Eligible Interest Bonds, 67 Elliot Associates v Banco de la Nacio´n, 68– 71 El Nin˜o, 151, 240, 244 El Salvador, 16 Emerging Markets Creditors Association (EMCA), 14, 192 Emerging market fund (EMF), 281–282 Emerging Markets Bond Index Global (EMBIG), 146, 196, 281–282, 288 Emerging Markets Traders Association (EMTA), 158, 294 EML, 75 EM Ltd., 187 Endogeneity, 46 English, William B., 6, 50 English law, 59–62, 68, 78, 191, 206 Enhancements, 18 373 Index Equations basic debt, 87 credit default swap, 321 debt as share of gross domestic product (GDP), 88 debt dynamics decompositions, 303–308 debt sustainability analysis, 309–310, 313 default probability, 317–319, 321 default utility, 242 dollar debt accumulation, 304–306 exchange rate appreciation, 305–306 interest cost impact, 327 local currency debt accumulation, 306– 308 net present value (NPV), 89–90 par floater, 318–319 recovery values, 325 Equilibrium debt crises cost and, 48–54 long-/short-term debt structures and, 37–38 solvency crises and, 41–44 (see also Solvency) Equity-like indexed liabilities, 235 Ernst & Young, 95 Esteves, Rui Pedro, 11–14 Eurobonds Ecuador and, 155, 158 Moldova and, 207 Pakistan and, 143 Russia and, 95, 98, 104, 107–109 Ukraine and, 125–127 Uruguay and, 221 Euroclear, 70 Europe boom-bust cycles and, 4–5 debt crises resolution and, 10–23 historical perspective on, 3–10 investors and, 23–29 Euros, 188 Ex ante conditionality, 278–280 Exchange rate, 141–143, 150 See also Currency issues crisis prevention and, 234–235 debt dynamics decompositions and, 302– 308 debt deals and, 255–268 dedollarization and, 236–242 Exclusivity problem, 277 Exit bonds, 18, 105 Extended Fund Facility (EFF), 94, 121, 129, 131 Face value, 90 Fallon, Peter R., 252 Fan-charts, 317 Federal Reserve Bank of New York, 70 Fernandez, Raquel, 33, 44 Ferrucci, Gianluigi, 316 Fertilizers, Fidelity Union Trust, 64–65 Fishlow, Albert, 6, 16, 21 Flandreau, Marc, 16, 22, 51 Floating interbank rate (FIBR), 139 Foreign currency reserves, 238 Foreign Sovereign Immunities Act (FSIA), 56–57 France Corporation of Foreign Bondholders (CFB) and, 11–14 historical restructurings and, 3, 5, 19, 21– 22 Free rider problems, 77, 80–81 Front-loading, 264 G-3 debt instruments, 281 G-8 countries, 138 Gale, Douglas, 270 Galvis, Sergio J., 74–75 Garcia, Marcio, 316–317 Gazprom bonds, 126–127, 129, 206–207, 209 Gelos, Gaston, 50–51 Gelpern, Anna, 79 German law, 59, 128–129 Germany, 4–5, 201 Corporation of Foreign Bondholders (CFB) and, 11–14 Dawes and Young Plan and, 20 Gersovitz, Mark, 31–32, 48 Ghosh, Atish R., 285 GKOs, 95, 97–109, 290 Global Committee of Argentine Bondholders (GCAB), 14, 187–188, 192 Goldstein, Morris, 291, 293 Gouraige, Ghislain, Jr., 74–75 Gourinchas, Pierre-Olivier, 255 Governing law, 58–59 Governments See Politics; Sovereign debt Goyal, Vidhan K., 289 Gramlich, Ludwig, 57 Great Depression, 6, 10 Greece, 3, 12, 16, 21 Greenspan-Guidotti rule, 238 Greenwood, Christopher, 65 374 Index Gross domestic product (GDP) measurement, 40, 45, 47, 52–53, 239, 267 Argentina and, 165, 168–170, 175, 188, 190–191, 196–197 crisis prevention and, 235 debt dynamics and, 87–88, 302–308 debt sustainability analysis and, 309–313 debt-to-GDP ratio and, 302–308 (see also Debt-to-GDP ratio) Dominican Republic and, 227 Ecuador and, 147–151, 163 fight/postponement decisions and, 245 interest cost impact and, 325–327 Moldova and, 203–205, 209 Pakistan and, 135–138, 146 real variable indexation and, 283–285 repayment profile and, 236–237 Russia and, 91–97, 104 Ukraine and, 131 Uruguay and, 213–216, 225–226 Grossman, Herschel I., 48–49, 52–53 Growth clauses, 267 Guano, 6, 16 Guatemala, 19 Guidotti, Pablo, 37, 238–239, 241, 291 Guimares, Bernardo, 276 Gulati, Mitu G., 61–62, 77–80 Hagan, Sean, 275 Haircuts Argentina and, 185, 193, 196 debt deals and, 260–264 Ecuador and, 160 fight/postponement decisions and, 243– 244 Moldova and, 207 recovery value estimation and, 322–325 Russia and, 105 sustaining economy and, 254–255 Ukraine and, 122, 124–125 Uruguay and, 219, 221, 224 Haldane, Andy, 22 Hausmann, Ricardo, 36, 292–293 Heathcote, Jonathan, 52 Hedging strategies, 115, 118, 285–288 Hemming, Richard, 308, 312 Higginbotham, Brian, 22 Hirshon v Bolivia, 81 Hitler, Adolph, 246 Holdout problem, 209 Allied Bank International v Banco Credito Agricola de Cartago, 21, 58, 64–65 CIBC Bank and Trust Co (Cayman) Ltd v Banco Central Brazil, 66–68 contract enforcement and, 63–74 domestic insolvency procedures and, 76– 81 Elliott Associates v Banco de la Nacio´n, 68– 71 Kensington v Republic of Congo, 71 LNC v Nicaragua, 71 mandatory class actions and, 80–81 Pravin Banker v Banco Popular del Peru, 68–71 pre–World War II era and, 64 Red Mountain Finance v Democratic Republic of Congo, 71 Honduras, 19 Houston terms, 144, 160 Hyperinflation, 264–265 Incomplete contracts problem, 270–272, 295 Indexation CPI bonds and, 188, 193, 237, 239, 267, 291 EMBI Global, 146, 196, 281–282, 288 equity-like liabilities and, 235 real variables and, 283–285 Standard and Poor’s, 139–140, 143, 287 Volatility Index (VIX) and, 287–288 India, 293 Indonesia, Inflation, Argentina and, 196–197 debt dynamics decompositions and, 304– 305 dollarization and, 236–237 Ecuador and, 147 hyperinflation and, 264–265 local currency instruments and, 293 moral hazard and, 37 public debt structures and, 237 Russia and, 91 sustaining economy and, 251–252 Ukraine and, 115 ING Barings, 118–119, 125 Institutions contractual arrangements and, 270–272, 295 crisis insurance fund and, 272–274 lending with prequalification and, 278– 280 price stabilization and, 280–282 375 Index reform and, 272–282 sovereign bankruptcy mechanisms and, 274–278 Insurance, 33, 35, 238–239, 272–273 contingent reserves and, 285–288 credit default swap and, 319–322 ex ante conditionality and, 278–280 hedging strategies and, 115, 118, 285–288 incomplete borrower information and, 35–36 Sovereign Debt Restructuring Mechanism (SDRM) and, 80, 274–278 Volatility Index (VIX) and, 287–288 InterAmerican Development Bank, 293 Interest arrears notes (IANs), 15, 95, 107– 111 Interest rates, 298, 300 debt deals and, 266 debt dynamics decompositions and, 302– 308 Ecuador and, 147, 156 Pakistan and, 135 Russia and, 105 subsidizing of, 43–44 Interest-to-GDP ratio, 297, 300 International comity, 58 International financial architecture bond covenants and, 288–291 boom-bust cycles and, 295 contingent reserves and, 285–288 contractual arrangements and, 270–272, 295 crisis insurance fund and, 272–274 deep distortions view and, 271–272 financial innovation and, 282–295 hedging strategies and, 285–288 lending with prequalification and, 278– 280 local currency instruments and, 291–294 real variable indexation and, 283–285 reform and, 269–282 sovereign bankruptcy mechanisms and, 274–278 International financial institutions (IFIs), 18, 86, 140, 168, 245, 285 International Financing Review, 124 International Monetary Fund (IMF), 10, 21–22, 236, 248 Argentina and, 170, 171, 176–177, 179, 186–188, 192–193, 196 Bank Advisory Committee (BAC) process and, 22 bankruptcy and, 77, 80–81 bond clauses and, 61–62 contingent reserves and, 285–288 contract enforcement and, 71 covenants and, 289 crisis insurance fund and, 273 debt crises and, 43–44, 47, 51 debtor in possession (DIP) financing and, 79 Dominican Republic and, 228–229 Ecuador and, 147, 150–151, 155, 157–158 ex ante conditionality and, 278–280 Extended Fund Facility (EFF) and, 94 fight/postponement decisions and, 245 hedging strategies and, 285–288 Moldova and, 205–207 nonconcessional lending and, 44 overborrowing and, 47 Pakistan and, 140–141, 144, 146 price stabilization fund and, 281 real variable indexation and, 283–285 Russia and, 91–94, 97–99, 107, 113 Sovereign Debt Restructuring Mechanism (SDRM) and, 80, 274–278 Stand-by Arrangement and, 91–94, 107, 144, 157 Ukraine and, 121–122, 126–128 Uruguay and, 214–215, 217, 219 Investors See also Bonds Argentina and, 173–196 Bank Advisory Committee (BAC) process and, 12–13, 18, 22 buybacks and, 24–25 consumption smoothing and, 32–33 Corporation of Foreign Bondholders (CFB) and, 11–15, 19 credit market repercussions and, 33–34 Dawes and Young Plan and, 20 diplomatic representations and, 20–21 domestic bonds and, 58–59 Dominican Republic and, 227–229 Ecuador and, 157–164 Emerging Markets Creditors Association (EMCA) and, 192 haircuts and, 25–26, 88–90 hedging strategies and, 115, 118, 285–288 historical perspective on, 23–29 international bonds and, 58–59 legal issues and, 55–81 Moldova and, 207 net present value (NPV) and, 89–90 official sector role and, 19–23 376 Index Investors (cont.) oil industry and, Pakistan and, 139–141 risk analysis of, 23–29 Ukraine and, 115, 118–133 Uruguay and, 211, 213–216, 224–226 Volatility Index (VIX) and, 287–288 Israel, 237, 293 Italian law, 59 Italy, 4, 20, 201, 235 Ize, Alain, 237 Izquierdo, Alejandro, 308, 313–314 Ja´come, Luis Ignacio, 151 Japan, 4–5, 28 Pakistan sanctions and, 138 policymakers and, 235 Samurai bonds and, 216, 219 Japanese law, 59, 62 Jarrow, Robert A., 322 Jayachandran, Seema, 43 Jeanne, Olivier, 301 debt crises and, 38, 41, 43 international financial architecture and, 273, 276, 278, 290–291 legal issues and, 79 policymakers and, 238, 248, 255 Jorgensen, Erika, 22, 24, 28, 50 JP Morgan, 108, 158, 173, 281 Kapteyn, Arend, 238 Kapur, Sandeep, 47 Kearns, Jonathan, 291 Kehoe, Patrick J., 33, 35, 39–40, 264 Kelly, Trish, 20 Kensington v Republic of Congo, 71 Kharas, Homi, 98–99, 247 Kindleberger, Charles P., Kirchner, Nestor, 187 Kiriyenko, Sergei, 97 Kletzer, Kenneth M., 32–35, 38, 290 Klingen, Christoph, 26, 28 Kohlscheen, Emanuel, 45 Korea, 245, 293 Kraay, Aart, 44–45, 47, 236 Krajnyak, Kornelia, 94, 99 Kremer, Michael, 43 Krueger, Anne O., 275 Kruger, Mark, 45 Krugman, Paul, 41 Kumhof, Michael, 51 Lando, David, 322 Latin America, 4, 5, 9–10, 12 See also Specific country Law of Financial Institutions (Ecuador), 147 Lee, Paul, 57 Legal issues acceleration and, 60–61 act of state doctrine and, 58, 65 aggregation clauses and, 78, 80, 191 Allied Bank International v Banco Credito Agricola de Cartago, 21, 58, 64–65 amendment clauses and, 61–62 Argentine law, 178 bankruptcy and, 61, 65–66, 75–81 bond contracts and, 59–62 Camdex International Limited v Bank of Zambia, 68 Champerty defense, 67–68 CIBC Bank and Trust Co (Cayman) Ltd v Banco Central Brazil, 66–68 collective action clauses (CACs), 77–78, 128, 141, 143, 206–207, 220, 270 collective representation clauses, 78 contract enforcement and, 55–56 (see also Contract enforcement) corporate debt and, 55 covenants and, 59–60 cross-acceleration clauses and, 108 cross-default and, 60–61 defaulting country courts and, 56 domestic bonds and, 58–59 Elliott Associates v Banco de la Nacio´n, 68– 71 enforcement issues and, 62–76 English law and, 59–62, 68, 78, 191, 206 Foreign Sovereign Immunities Act (FSIA) and, 56–57 free rider problem and, 77, 80–81 governing law and, 58–59 growth clauses and, 267 Hirshon v Bolivia, 81 holdout problem and, 63–74 insolvency procedures and, 76–81 international bonds and, 58–59 international comity and, 58 jurisdiction and, 55 Kensington v Republic of Congo, 71 LNC v Nicaragua, 71 majority action clauses and, 78 mandatory class actions and, 80–81 377 Index most favored creditor clause and, 191 negative pledge clause and, 59–60 New York law and, 59–60, 66–68, 75–76, 218, 229, 268 pari passu clause and, 59–60, 70 post-restructuring litigation and, 63–74 Pravin Banker v Banco Popular del Peru, 68–71, 75 pre-restructuring litigation and, 74–76 ‘‘race to the courthouse’’ and, 74–76 Red Mountain Finance v Democratic Republic of Congo, 71 remedies and, 59–61 Republic of Argentina v Weltover, 57 Smith v Poder Ejecutivo, 185–186 Trust Indenture Act and, 61 Urban v Republic of Argentina, 192 Lenders See also Creditors agency costs and, 37 banks and, (see also Banks) bond contracts and, 59–62 credit market repercussions and, 33–34 debt crises cost and, 48–54 ex ante conditionality and, 278–280 hedging strategies and, 115, 118, 285–288 Houston Terms and, 144 incomplete borrower information and, 35–36 international prequalifications and, 278– 280 legal issues and, 55–81 moral hazard and, 37, 53–54 Naples Terms and, 144 one-/two-sided commitment problem and, 33–34 repayment enforcement and, 33–35 sovereign immunity and, 31–36, 55–61 Volatility Index (VIX) and, 287–288 Lending booms, Levy-Yeyati, Eduardo, 237, 293, 308, 316 Lindert, Peter H., 4, 22, 26, 28, 50 Lipson, Charles, 19 Liquidity, 39–40 Argentina and, 186 contingent reserves and, 285–288 crisis prevention and, 234–239 debt deals and, 255–268 dedollarization and, 236–242 Ecuador and, 154 fight/postponement decisions and, 242– 249 financing requirements and, 301 front-loading and, 264 hedging strategies and, 115, 118, 285–288 holdout problem and, 63–74 indicators for, 297–302 insurance and, 238–239 interest rates and, 301–302 local currency instruments and, 291–294 measurement of, 301–302 pay-as-you-go systems and, 300 price stabilization fund and, 280–282 ‘‘race to the courthouse’’ and, 74–76 real variable indexation and, 283–285 Russia and, 97–99, 104–113 sustaining economy and, 249–255 Uruguay and, 213–216, 219 Lira, 188 LNC v Nicaragua, 71 London Chamber of Commerce, 11 London Club, 13–14 London Interbank offer rate (LIBOR), 17– 18, 141, 156, 178, 207, 221 Lo´pez Fagu´ndez, Federico, 190 Lorenzoni, Guido, 37 Lucas, Robert E B., 252 Luxembourg law, 59–60 Luxembourg Stock Exchange, 160 McBrady, Matthew R., 141 McFadden, Daniel, 44 Machinea, Jose Luis, 170 Mahuad administration, 156 Manasse, Paolo, 44, 46–47, 236, 238 Mandatory class actions, 80–81 Marichal, Carlos, Markets, Baker Plan and, 17–18 bond, 95 (see also Bonds) commodity prices and, corporate debt, credit constraints and, 40–41 credit market repercussions and, 33–34 debt crises cost and, 48–54 emerging market fund (EMF) and, 281– 282 Emerging Markets Bond Index Global (EMBIG) and, 146, 196, 281–282, 288 Emerging Markets Creditors Association (EMCA) and, 14, 192 incomplete borrower information and, 35–36 378 Index Markets (cont.) international trade effects and, 50 liberalization and, 115 local currency instruments and, 291–294 long-/short-term debt structures and, 37–38, 46 loss of access to, 50–51 moral hazard and, 37 original sin hypothesis and, 292 overborrowing and, 41–44 price stabilization fund and, 280–282 repayment enforcement and, 34–35 secondary sovereign bond spreads and, 44–45 sovereign immunity and, 31–36, 55–61 terms of trade and, Volatility Index (VIX) and, 287–288 Mauro, Paolo, 11–12, 16, 19, 53, 239, 284 Maximilian, Emperor of Mexico, 19, 27 Mega swap plan, 165, 173–177, 193, 196 Mendoza, Enrique G., 41, 308, 316 Mercer, Hugh, 65 Merrick, John, Jr., 322 Merrill Lynch, 118, 122, 125–128, 129 Messmacher, Miguel, 45 Mexico, 237, 274 Corporation of Foreign Bondholders (CFB) and, 12–14 Ecuador and, 150 exit bonds and, 18 fight/postponement decisions and, 245 hedging strategies and, 285–288 historical restructurings and, 4, 10, 21, 25, 28–29 local currency instruments and, 293 Maximilian and, 19, 27 multiyear rescheduling agreements (MYRAs) and, 17 MinFin bonds, 91, 95, 107, 109 Mitchener, Kris James, 19–20 Mody, Ashoka, 268 Moldova, 61, 85, 233 bonds and, 207, 209 collective action clauses and, 206–207 debt-to-GDP ratio of, 209 energy payment arrears and, 203 external debt maturities of, 205 fight/postponement decisions and, 244 Gazprom arrears and, 206–209 haircuts and, 207 holdout problem and, 209 International Monetary Fund (IMF) and, 205–207 official debt of, 203–204 Russian Federation and, 206 Soviet demise and, 203 TCW Asset Management Company (TAMCO) and, 206, 209 workers’ remittances and, 206 World Bank and, 207 Monte Carlo simulations, 317 Moody’s, 141 Moral hazard, 37, 53–54 bond covenants and, 288–291 international financial architecture and, 284, 288–294 local currency instruments and, 291–294 Morocco, 16 Morton, Peter J., 4, 22, 26, 28, 50 Most favored creditor clause, 191 Mulder, Christian, 238 Multiyear Deposit Facility Agreement (MYDFA), 66–67 Multiyear rescheduling agreements (MYRAs), 17–18 Murphy, Ricardo Lopez, 170, 171 Naples terms, 144 Napoleonic wars, National Bank of Ukraine (NBU), 118– 119, 122, 125 Negative covenants, 289–291 Negative pledge clause, 59–60 Negotiation process Bank Advisory Committee (BAC) process and, 12–13 bankruptcy and, 76–81 Brady Plan and, 18–19 Corporation of Foreign Bondholders (CFB) and, 11–15, 19 creditor coordination and, 11–15 efficiency issues and, 11 exit bonds and, 18 holdout problem and, 63–74 multiyear rescheduling agreements (MYRAs) and, 17–18 official sector and, 19–23 ‘‘race to the courthouse’’ and, 74–76 restructuring agreements and, 15–19 Russia and, 100–101 Nehru, Vikram, 44–45, 47, 236 Netherlands, 379 Index Net present value (NPV), 89–90 Argentina and, 185, 187, 190 crisis prevention and, 236 debt deals and, 265 debt reduction and, 17–18 Ecuador and, 160 Moldova and, 207 Pakistan and, 143 Uruguay and, 216, 221 New money loans, 22 New York Clearing House Association, 65, 70 New York law, 59–60, 66–68, 218, 229, 268 Nicaragua, 20, 71 NML Capital, 76 Noboa administration, 156 Nuclear testing, 86, 138 Odling-Smee, John, 99 Official development assistance (ODA) loans, 140, 144, 160, 163 OFZs, 95, 97, 104–106 Oil, 5–6 Ecuador and, 151 Russia and, 95–97 Uruguay and, 211 One-sided commitment problem, 33–34 ‘‘Original sin’’ hypothesis, 36–37, 292 Ostry, Jonathan D., 280, 312–313, 316–317 Ottoman Empire, 4, 27 OVDPs, 118, 121–125 Overborrowing, 41–44, 47 Overvaluation, 45 Oviedo, P Marcelo, 308, 316 ă zler, Sule, 51 O Pakistan, 61, 8586, 228, 233, 298, 324 banks and, 135, 139–141, 144–146, 151 bonds and, 141–146 collective action clauses and, 77–78, 141, 143 crisis of 1998 and, 138–141 currency issues and, 135, 138–140 Emerging Markets Bond Index Global (EMBIG) and, 146 foreign deposits and, 135, 138 historical restructurings and, 14, 19, 25 Houston terms and, 144 International Monetary Fund (IMF) and, 140–141, 144, 146 interest burden of, 135 Law of Financial Institutions and, 147 loss of market access and, 50 Naples terms and, 144 nuclear tests and, 138 official development assistance (ODA) loans and, 140, 144 Paris Club and, 140–141, 144–146 politics and, 135, 138 public debt burden of, 135, 147, 150 S&P ratings and, 139–140, 143 sanctions against, 138–139 Stand-by Arrangement and, 144 State Bank of, 135, 138 Pam, Jeremiah S., 60 Panageas, Stavros, 239, 287 Panama, 19, 68–71, 265 Panizza, Ugo, 36, 292, 308 Paraguay, 16 Par bonds, 18 Par floaters, 318–319 Pari passu clause, 59–60, 70 Paris Club Dominican Republic and, 228 Ecuador and, 147, 160–161 Pakistan and, 140–141, 144–146 Russia and, 95, 107, 113 Ukraine and, 131 Part due interest (PDI), 18, 108, 155, 158, 179, 190 Pay-as-you-go systems, 300 Pearl Harbor, 28 Pedersen, Lasse Heje, 91 Penalver, Adrian, 316 Pension funds, 218–219, 300 Performing debt, 190–191 Pernice, Sergio A., 190 Perotti, Roberto, 43 Peru, 237, 265, 293 Corporation of Foreign Bondholders (CFB) and, 12 historical restructurings and, 16, 24 Pravin Banker v Banco Popular del Peru, 68–71, 75 Pescatori, Andrea, 45 Pesification, 165, 182–186, 255 Peterson, Michael, 155 Pinto, Brian, 98–99, 247 Poisson process, 318 Poland, 4, 12, 17, 237, 293 Policy, See also Restructurings Argentina and, 165, 168, 170–186 380 Index Policy (cont.) Baker Plan and, 17–18 Bank Advisory Committee (BAC) process and, 12–13, 18, 22 bank runs and, 248 bankruptcy and, 61, 65, 76–81 bond covenants and, 59–60, 288–291 Brady Plan and, 18–22, 66–67 Corporation of Foreign Bondholders (CFB) and, 11–15, 19 crisis preparation, 239–242 crisis prevention, 234–239 currency mismatches and, 247–248 Dawes and Young Plan and, 20 debt deals and, 255–268 dedollarization and, 236–242 default implementation and, 249–268 dollarization and, 41, 155–157, 188, 211, 213, 219, 221, 236–242, 244 Dominican Republic and, 227–229 Ecuador and, 147, 150–151, 154 fight/postponement decisions and, 242– 249 foreign currency reserves and, 238 Foreign Sovereign Immunities Act (FSIA) and, 56–57 Greenspan-Guidotti rule and, 238 insurance and, 238–239, 272–274 international financial architecture and, 269–295 International Monetary Fund (IMF) and, 21–23, 43 (see also International Monetary Fund (IMF)) Law of Financial Institutions and, 147 lending booms and, 5–6 liberalization, 115, 150 Moldova and, 206–209 multiyear rescheduling agreements (MYRAs) and, 17–18 negotiation process and, 10–23 ‘‘original sin’’ debt structure and, 36–37 Pakistan and, 147 postponement and, 242–247 prequalification, 273–282 price stabilization fund and, 280–282 public debt structures and, 237 reform implementation and, 242–243 repayment profile and, 236–237 Russia and, 97–99, 104–113 short-/long-term debt and, 248 sovereign bankruptcy mechanisms and, 274–278 Sovereign Debt Restructuring Mechanism (SDRM) and, 80, 274–278 sustaining economy and, 249–255 Ukraine and, 126–133 Uruguay and, 211, 214–215, 224–226 World Bank and, 43 Politics Argentina and, 170–173, 182, 186 boom-bust cycles and, 5–6, civil conflicts and, Communism and, diplomatic representations and, 20–21 Ecuador and, 156–157 immunity and, 31–36, 55–58 imperialism and, 20 international financial architecture and, 270–282 International Monetary Fund (IMF) and, 21–23 legal issues and, 55–81 London Club and, 13–14 official sector role and, 19–23 Pakistan and, 135, 138 Russia and, 97, 100–101 sustaining economy and, 249–255 wars and, Ponzi game, 309–310 Portes, Richard, 11, 15, 19–21, 26, 46, 77, 274 Portugal, 3–4, 12 Powell, Andrew, 237 Power, Philip J., 57–58, 66, 68, 75 Prasad, Eswar, 255 Prati, Alessandro, 39–40 Pravin Banker v Banco Popular del Peru, 68– 71, 75 Prequalification policies crisis insurance fund and, 272–274 international crisis lending and, 278–280 price stabilization fund and, 280–282 sovereign bankruptcy mechanisms and, 274–278 Preset priority structure, 79–80 Prices, 91 Global 2027, 218 net present value (NPV) and, 89–90 oil, 5–6, 95–97, 151, 211 recovery values and, 317–325 shocks, 4–5, 32, 86, 236, 238–240, 283–285 stabilization fund and, 280–282 volatility and, 37 Principal notes (Prins), 95, 107–109, 111 381 Index Priyadarshani, Joshi, 22, 278 Property rights, 185–186 Prussia, Public debt structures, 237 Put option, 59 Quasifiscal liabilities, 300 Quasipar bonds, 188, 190 ‘‘Race to the courthouse,’’ 74–76 Railroads, 5, 16 Rajan, Raghuram, 54, 237, 291, 293 Real interest effect, 307 Rebelo, Sergio, 41 Recession, Recovery values, 38 credit default swaps and, 319–322 estimation of, 322–325 par floaters and, 318–319 sovereign spread estimation and, 317– 319 Recursive tree analysis, 46 Red Mountain Finance v Democratic Republic of Congo, 71 Reform crisis insurance fund and, 272–274 deadweight loss and, 270 international financial architecture and, 269–282 lending with prequalification and, 278– 280 price stabilization fund and, 280–282 Sovereign Debt Restructuring Mechanism (SDRM) and, 80, 274–278 Regression analysis, 51–52 Reinhart, Carmen M., 3, 40, 45, 47 Repayment profile, 236–237 Repo lines, 286–288 Republic of Argentina v Weltover, 57 Reschedulings crisis cost reduction and, 53 historical perspective on, 3–10 Restructurings, 85–86 agreement content and, 15–19 Argentina and, 165–201 Bank Advisory Committee (BAC) process and, 12–13, 18, 22 bonds and, 18–19 (see also Bonds) Brady Plan and, 18–19 buyback and, 24–25 Corporation of Foreign Bondholders (CFB) and, 11–15, 19 debt deals and, 255–268 defined, Dominican Republic and, 227–229 Ecuador and, 147–164 exit bonds and, 18 haircuts and, 88–90 (see also Haircuts) historical perspective on, 3–10 holdout problem and, 63–74 insurance and, 238–239 interest cost impact of, 325–327 International Monetary Fund (IMF) and, 21–23 (see also International Monetary Fund (IMF)) legal issues and, 55–81 macroeconomic credibility and, 237–238 Moldova and, 206–209 Multiyear Deposit Facility Agreement (MYDFA) and, 66–67 multiyear rescheduling agreements (MYRAs) and, 17 negotiation process and, 10–23 net present value (NPV) debt reduction and, 17–18 official role and, 19–23 Pakistan and, 135–146 performing debt and, 190–191 private financial sector and, 236–237 public debt structures and, 237 ‘‘race to the courthouse’’ and, 74–76 repayment profile and, 236–237 Russia and, 91–113 Sovereign Debt Restructuring Mechanism (SDRM) and, 80, 274–278 sustaining economy and, 249–255 Ukraine and, 126–133 Uruguay and, 211–226 wars and, Revolutions, Richards, Anthony J., 268 Rieffel, Lex, 12, 17, 21–24, 28, 188 Rigobo´n, Roberto, 316–317 Robinson, David O., 95, 111 Rodrı´guez Saa´, Adolfo, 182 Rodrik, Dani, 38 Rogoff, Kenneth S., 3, 22, 32–36, 45, 47, 80, 274 Rollover risk, 239–240, 271 Romania, Rose, Andrew K., 50 Rosenthal, Robert W., 33 Roubini, Nouriel, 44, 46–47, 79, 236, 238, 276 382 Index Russia, 85, 90, 151, 179, 203, 233 anticrisis plan of 1998 and, 97–99 ARCO and, 103–104 banking crisis of, 101–104 bonds and, 91, 94–95, 100–113 borrowing costs and, 51 Central Bank of the Russian Federation (CBR) and, 94–95, 97, 101–104 Chermomyrdin and, 101 Cold War and, 56 cross-acceleration clauses and, 108 currency issues and, 91, 94–101, 111, 113 debt analysis tools and, 298, 314, 322 debt deals and, 265 default of, 99–101, 104–113 devaluation and, 99–101 domestic problems of, 86 Eurobonds and, 104, 107–109 exchange rate and, 91, 95–96, 104–105, 111, 113 external assets of, 91 external debt of, 104–113 fight/postponement decisions and, 244, 247 fiscal reform and, 97 GKOs and, 95, 97–105, 107, 109, 290 haircuts in, 105 historical restructurings and, 4, 6, 14, 19, 25, 27–28 hyperinflation of, 91 interest arrears notes and, 95, 107–109, 111 international credit and, 95 international financial architecture and, 280–281 International Monetary Fund (IMF) and, 94, 97–99, 107, 113 Kiriyenko dismissal and, 100–101 legal issues and, 61 loss of market access and, 50 money supply limiting and, 94–95 OFZs and, 95, 97, 100, 102–105, 107 oil prices and, 95–97 Paris Club and, 95, 107, 113 principal notes and, 95, 108–109, 111 public debt of, 91, 93 rollover risk and, 240 Sberbank and, 95, 101–103 Soviet demise and, 91 sustaining economy and, 253–255 Vneshekonombank and, 107–108, 267 Yeltsin and, 101 zero option and, 91 Sachs, Jeffrey D debt crisis basics and, 33, 38–39, 46, 50 historical restructurings and, 6, 22, 24, 28 international financial architecture and, 274, 290 Safe zones, 46–47, 234–239 Sahay, Ratna, 50–51 Salomon Smith Barney, 129, 158, 174 Samurai bonds, 62, 216, 219 Sanctions, 9, 21, 86 debt crisis basics and, 49, 53 loss of market access and, 50–51 Pakistan and, 138–139 trade credit denial and, 33 Sandlen, 50–51 Sandleris, Guido, 51 Santos, Alejandro, 91 Savastano, Miguel A., 3, 45, 47 Sberbank, 95, 101–103 Schimmelpfennig, Axel, 44 Schmukler, Sergion L., 37 Schnabel, Isabel, 51 Schneider, Martin, 41 Schuler, Kurt, 22 Schwarcz, Steven L., 77 Schwartz, Anna J., 21 Seasholes, Mark S., 141 Selective default, 139–140, 178 Serbia, 16 Setser, Brad, 79 Shleifer, Andrei, 275 Shocks, 4–5, 32, 86, 236 insurance and, 238–239 real variable indexation and, 283–285 rollover risk and, 240 Singapore, 293 Singh, Manmohan, 71, 322, 324 Singleton, Kenneth, 91 Skeel, Davis A., 77, 79–80, 277 Skeletons, 300 Smith, Cliff, 289 Smith v Poder Ejecutivo, 185–186 Solvency, 41–44, 49 domestic insolvency procedures and, 76– 81 indicators for, 297–302 measurement of, 297–301 pay-as-you-go systems and, 300 quasifiscal liabilities and, 300 383 Index Sosa Navarro, Ramiro, 322 South Africa, 4, 9, 293 Sovereign debt See also Specific country bankruptcy mechanisms and, 274–278 consumption smoothing and, 32–33 contract enforcement and, 31–36, 55–56, 62–76 (see also Contract enforcement) credit market repercussions and, 33–34 directed punishments and, 33 emerging market structures and, 36–38 environment for existence of, 31–36 Foreign Sovereign Immunities Act (FSIA) and, 56 immunity and, 31–36, 55–61 incomplete borrower information and, 35–36 International Monetary Fund (IMF) and, 21–23 legal issues and, 55–81 long-/short-term debt structures and, 37–38 loss of market access and, 50–51 newly independent governments and, official sector role and, 19–23 ‘‘original sin’’ structure and, 36–37 political conflicts and, reschedulings and, 3–10 solvency crises and, 41–44, 76–81 trade credit denial and, 33 Sovereign Debt Restructuring Mechanism (SDRM), 80, 274–278 Sovereign immunity absolute, 56 act of state doctrine and, 58 bond clauses and, 60–61 contract enforcement and, 31–36, 55–58 Foreign Sovereign Immunities Act (FSIA) and, 56–57 Republic of Argentina v Weltover and, 57 United States and, 56–57 Spain, 3–4, 12, 19 Spiegel, Mark M., 50 Spilimbergo, Antonio, 44, 46 Spillovers, 49–51, 138 Stamm, Hanspeter, 19 Standard and Poor’s (S&P), 139–140, 143, 287 State Bank of Pakistan (SBP), 135, 138 Static sustainability analysis, 310 Sterling bonds, 26 Sturzenegger, Federico Argentina and, 183, 193 debt analysis tools and, 308, 316, 324 debt crisis basics and, 51–52, 89 historical restructurings and, 17, 24–25 policymakers and, 239 Russia and, 105, 107 Sudan, 12 Sussman, Nathan, 11–12, 16, 19 Suter, Christian, 4, 11, 16, 19, 24 Sutton, Bennett, 45 Switzerland, 11–14, 57 Sy, Amadou N R., 45 Tabellini, Guido, 39–40 Talvi, Ernesto, 313–314 Tanner, Evan, 51 Taxes, 43 Argentina and, 170, 171 crisis preparation and, 239–240 Pakistan and, 135 Russia and, 104 Taylor, John, 77 T-bills See Bonds TCW Asset Management Company (TAMCO), 206, 209 Technical defaults, 44 Tequila crisis, 168, 211 Terms of trade, Thaicharoen, Yunyong, 268 Thailand, 293 Tomz, Michael, 20, 52 Tornell, Aaron, 41 Total factor productivity, 302 Trade credit, 33 Transversality condition, 309–310 Trust Indenture Act, 61 Tunisia, 16 Turkey, 4, 10, 16, 313 Corporation of Foreign Bondholders (CFB) and, 12 policymakers and, 245 restructuring of, 27–29 Turnbull, Stuart M., 322 Turner, Philip, 291, 293 Two-sided commitment problem, 34 Ukraine, 85, 160, 203, 209, 236 August 1999 exchange and, 125–126 banks and, 115, 118–122, 128–129 bonds and, 61–62, 118–133 borrowing conditions and, 118–119 Central Bank of the Russian Federation (CBR) and, 115 384 Index Ukraine (cont.) collective action causes and, 128 credit rating of, 118 currency issues and, 119–133 debt deals and, 265, 268 devaluation and, 119–121 Eurobonds and, 125–127 Extended Fund Facility (EFF) and, 121, 129, 131 fall 1998 debt exchanges and, 121–125 fight/postponement decisions and, 244 fiscal reform and, 118–119 Gazprom bonds and, 126–127, 129 haircuts in, 122, 124–125 hyperinflation of, 115 improved portfolio of, 129–133 International Monetary Fund (IMF) and, 121–122, 126–128 loss of market access and, 50 monetary stabilization and, 115 OVDPs and, 118, 121–125 Paris Club and, 131 restructuring of, 15, 19, 25, 126–133 rollover risk and, 240 Russian crisis and, 115, 118–121 sustaining economy and, 253–255 Ulatov, Sergei, 98–99, 247 United Kingdom, 6, 22, 26 bond clauses and, 61 boom-bust cycles and, Brady Plan and, 18–19 British Bankers’ Association, 11 Corporation of Foreign Bondholders (CFB) and, 11–15, 19 Dawes and Young Plan and, 20 diplomatic representations and, 20–21 Egypt and, 19–20 Foreign Sovereign Immunities Act (FSIA) and, 56–57 imperialism and, 20 London Chamber of Commerce and, 11 London Club and, 13–14 official sector role and, 19 United States, 26, 322 Allied Bank International v Banco Credito Agricola de Cartago and, 21, 58, 64–65 Argentina and, 177 banking sector and, bankruptcy and, 61, 65–66 bond clauses and, 61 boom-bust cycles and, 4–5 Cold War and, 56 Corporation of Foreign Bondholders (CFB) and, 11–14 Cuba and, 21 defaults and, Department of Justice and, 21 diplomatic representations and, 20–21 dollarization and, 188 Federal Reserve and, 21 Great Depression and, 6, 10 mandatory class actions and, 80–81 Pakistan sanctions and, 138 Pearl Harbor and, 28 Republic of Argentina v Weltover and, 57 sovereign immunity and, 56 Supreme Court of, 57–58 Treasury Department of, 21 Uruguay and, 219 Urban v Republic of Argentina, 192 Uruguay, 85, 191, 228–229, 281 aging population of, 211 Argentina and, 211, 213–216, 219, 224– 225 bankruptcy and, 78 banks and, 211–216 benchmark bond option and, 217 bonds and, 61, 216–224 Brady Plan and, 217, 219 Brazil and, 211, 213 Chile and, 218–219 currency issues and, 211, 213–216, 219, 224–226 debt deals and, 265–266 debt exchange and, 216–226 debt-to-GDP ratio of, 214, 216, 225–226 dollarization and, 211, 213, 219, 221 fight/postponement decisions and, 244 foreign investors and, 211, 213 Fund for Fortifying the System of Banks and, 214 Fund for the Stability of the Banking Sector (FSBS) and, 215 haircuts and, 219, 221, 224 historical restructurings and, 9, 19, 25 International Monetary Fund (IMF) and, 214, 215, 217, 219 liquidity issues and, 213–216, 219 local currency instruments and, 293 maturity extension option and, 217 New York law and, 218 oil monopoly of, 211 policy results of, 224–226 privatization and, 211 385 Index recovery values and, 324 reform and, 211 Samurai bonds and, 216, 219 sustaining economy and, 254 tequila crisis and, 211 Van Huyck, John B., 48–49, 52–53 Van Rijckeghem, Caroline, 45, 47 Vector autoregressions, 316–317 Velasco, Andres, 38 Venezuela, 20 Ventura, Jaume, 51 Vietnam, 18 Villar, Agustı´n, 239 Vneshekonombank, 107–108, 267 Volatility Index (VIX), 287–288 War, 12, 19 Cold War era, 56 World War I era, 4–5, 16, 27–28 World War II era, 4, 16, 20–21, 28, 50, 56 Warburg Dillon Read, 118 Warner, Jerald, 289 Weder, Beatrice, 26, 28, 45 Weidenmier, Marc D., 19–20 Welfare, 47 Wijnholds, J Onno de Beaufort, 238 Williamson, John, 98 Winkler, Max, Wizman, Thierry, 289 World Bank, 24, 26, 43 bond covenants and, 289 local currency instruments and, 293 Moldova and, 207 policymakers and, 236 Wright, Brian D., 33–34 Wright, Mark L., 11, 36 Wyplosz, Charles, 238, 248, 301 Yafeh, Yishay, 11–12, 16, 19 Yeltsin, Boris, 101 Yen, 188 Yugoslavia, Zaăre, 12, 21 Zero deficit rule, 176 Zero option, 91 Zettelmeyer, Jeromin, 80, 89 Argentina and, 183, 193 debt analysis tools and, 324 debt crisis basics and, 41, 43, 51 historical restructurings and, 22, 25–26, 28 international financial architecture and, 274, 278, 280 policymakers and, 248 Russia and, 94, 99, 105, 107 Zumer, Fre´deric, 51 .. .Debt Defaults and Lessons from a Decade of Crises Debt Defaults and Lessons from a Decade of Crises Federico Sturzenegger and Jeromin Zettelmeyer The MIT Press Cambridge, Massachusetts... We are particularly grateful to Francisco Ceballos, Federico Dorso, Luciana Esquerro, Pryanka Malhotra, Carolina Molas, Luciana Monteverde, Maria Fernandez Vidal, Victoria Vanasco, and So a Zerbarini... Printed and bound in the United States of America Library of Congress Cataloging-in-Publication Data Sturzenegger, Federico Debt defaults and lessons from a decade of crises / Federico Sturzenegger,