Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/230333
Authors: 
Gulati, Mitu
Panizza, Ugo
Year of Publication: 
2020
Series/Report no.: 
Graduate Institute of International and Development Studies Working Paper No. 08-2020
Abstract: 
Unnoticed in the literature on sovereign bonds, an innovation has been taking place over the past decade and a half. Starting with a single issuance in 2006 by Mexico and two issuances by Brazil in 2007, a small number of issuers have been using what are known as "doomsday" or "make whole" call provisions. These are call options set deep out of the money at issuance, and therefore unlikely to ever be triggered. We report the birth and evolution of the clause over the past fifteen years and ask what drove its application to sovereign bonds. We also estimate its cost for the issuing country. It turns out, at least thus far, that it is free.
Subjects: 
make-whole call
doomsday call
sovereign bonds
JEL: 
F34
H63
K12
K22
Document Type: 
Working Paper

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