Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/202326 
Year of Publication: 
2019
Series/Report no.: 
Kiel Working Paper No. 2129
Publisher: 
Kiel Institute for the World Economy (IfW), Kiel
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 like the IMF and World Bank are senior creditors.
Subjects: 
Sovereign default
Arrears
Insolvency
Priority
IMF
Official Debt
Sovereign bonds
International Financial Architecture
Pecking Order
JEL: 
F3
F4
F5
G1
Document Type: 
Working Paper

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