Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/198992 
Year of Publication: 
2019
Series/Report no.: 
CESifo Working Paper No. 7632
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
Sovereign governments owe debt to many foreign creditors and can choose which creditors to favor when making payments. This paper documents the de facto seniority structure of sovereign debt using new data on defaults (missed payments or arrears) and creditor losses in debt restructuring (haircuts). We overturn conventional wisdom by showing that official bilateral (government-to-government) debt is junior, or at least not senior, to private sovereign debt such as bank loans and bonds. Private creditors are typically paid first and lose less than bilateral official creditors. We confirm that multilateral institutions such as the IMF and World Bank are senior creditors.
Document Type: 
Working Paper
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