Search results for "DEBT"
showing 10 items of 295 documents
Fighting the COVID-19 Crisis: Debt Monétisation and EU Recovery Bonds
2020
AbstractThis paper highlights some peculiar characteristics of the economic crisis induced by the spread of COVID-19. It suggests two intertwined policy measures in order to tackle the emergency phase of the crisis and to support the economy in the subsequent recovery phase. The proposed short-term policy measures offer policy responses in the event of a second wave of coronavirus infections in the coming months. In the aftermath of the emergency phase, the current proposal puts forward the implementation of a massive EU-wide recovery plan addressing the long-lasting technological and environmental challenges of these years, which will be financed by European institutions through the issuan…
Risk Management for Sustainable Sovereign Debt Financing
2021
We model sovereign debt sustainability with optimal financing decisions under macroeconomic, financial, and fiscal uncertainty, with endogenous risk and term premia. Using a coherent risk measure we trade-off debt stock and flow risks subject to sustainability constraints. We optimize static and dynamic financing strategies and demonstrate economically significant savings from optimal financing compared with simple rules and consols, and find that optimizing the trade-offs can be critical for sustainability. The model quantifies minimum refinancing risk and maximum rate of debt reduction that a sovereign can achieve given its economic fundamentals, and an extension identifies optimal timing…
Discussion of “Optimal Debt Service: Straight vs. Convertible Debt”
2006
Corporate bond default plays a signifi cant role in today's business environment. According to Moody's, a leading provider of credit ratings, corporate bond issuers that it rated as of January 1, 2004, defaulted on a total of US $16 billion in 2004. Credit default not only affects the equity investors of a firm, but also the debt holders, who may loose part of their credit. Default can also have dramatic consequences for a firm's future operations. Therefore, the decision of if and when to default is important for both the firm and its stakeholders. There is a substantial body of literature on the determination of optimal default points as a strategic decision by the owners of a firm. Accor…
Financial Companies in Latvia: Why are they Coming to the Bond Market?
2019
In the period 2013-2017 Latvian corporate bond market had experienced the abrupt growth of the number of public Latvian corporate bond issues outstanding. The base of the expansion was formed by the financing activity of Latvian financial sector issuers (FSIs) with their weight in the pool of corporate bond issues listed in Nasdaq Riga at 85%. In 2019, FSIs remain the main issuer in Latvian corporate bond market (64% of the number of issues (Nasdaq Baltic, 2019)). The financing needs and preferences of the FSIs not only shape the segment profitability but also build Latvian corporate bond market sustainability. 
 Academic papers provide broad motivation for corporate debt issuing: an e…
Challenges and trends of debt capital raising by SME: experience of the Baltic States
2012
The paper analyses topical issue of debt capital raising by small and medium-sized enterprises in the Baltic States under changing economic conditions. Raise of debt capital is crucial for SME, as financing and its availability is a critical precondition for the survival and development of enterprises. The paper gives an assessment of recent developments in debt capital raising in the Baltic States, identifies the most important challenges and problems, as well as the mistakes made. Based on the analysis made, authors provide solutions for debt capital raising challenges and possible changes in corporate finance of enterprises.
Pricing sovereign contingent convertible debt
2018
We develop a pricing model for Sovereign Contingent Convertible bonds (S-CoCo) with payment standstills triggered by a sovereign's Credit Default Swap (CDS) spread. We model CDS spread regime switching, which is prevalent during crises, as a hidden Markov process, coupled with a mean-reverting stochastic process of spread levels under fixed regimes, in order to obtain S-CoCo prices through simulation. The paper uses the pricing model in a Longstaff-Schwartz American option pricing framework to compute future state contingent S-CoCo prices for risk management. Dual trigger pricing is also discussed using the idiosyncratic CDS spread for the sovereign debt together with a broad market index. …
Debt Cancellation in the Classical and HellenisticPoleis: Between Demagogy and Crisis Management
2017
This article discusses the way the ancient Greeks dealt with public and private debts, focusing on one specific aspect: debt cancellation. On the one hand, ancient Greeks were aware of the risks en...
Credit, Debt and FInances of the Queen's Household in the Crown of Aragon at the End of the Fourteenth Century. The Agreement between the Queen Viola…
2018
A finales del siglo XIV la tesorería de la reina Violante de Bar padecía de un fuerte endeudamiento que imposibilitaba prácticamente cualquier pago, por lo que se decidió cambiar la dirección de la gestión económica de la Casa de la reina. En el presente artículo analizaremos las estrategias para solucionar el problema del endeudamiento, mediante la edición y el análisis de los excepcionales capítulos y memoriales firmados por la reina Violante y su nuevo tesorero, Berenguer de Cortilles, uno de sus mayores acreedores privados. At the end of the Fourteenth century, Queen’s treasury in the Crown of Aragon suffered from a heavy debt that made virtually impossible any ordinary payment. As a re…
How Costly are Debt Crises?
2010
The aim of this paper is to assess the short- and medium-term impact of debt crises on GDP. Using an unbalanced panel of 154 countries from 1970 to 2008, the paper shows that debt crises produce significant and long-lasting output losses, reducing output by about 10 percent after eight years. The results also suggest that debt crises tend to be more detrimental than banking and currency crises. The significance of the results is robust to different specifications, identification and endogeneity checks, and datasets.
Repatriation of Debt in the Euro Crisis: Evidence for the Secondary Market Theory
2013
The Euro Crisis has marked a sharp inversion in the process of the European financial integration and, more specifically, a repatriation of countries' debt from foreign to domestic investors. Yet the drivers of the financial fragmentation remain unclear. This paper investigates the empirical patterns in light of competing theories of cross-border portfolio allocation. Three main empirical regularities stand out: i) the repatriation of debt occurred primarily in crisis countries; ii) the repatriation affected mainly public debt; iii) the public debt of crisis countries was reallocated to politically influential countries within the Euro Area. Standard theories of portfolio allocation and hom…