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Valuation of Menu items in Debt Restructuring

This paper outlines a procedure for calculating the cash value of “menu items” in debt restructuring proposals, including par and non-par exchanges, with enhancements consisting of either interest or principal guarantees. It is argued that under certain plausible assumptions interest and principal g...

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Bibliographic Details
Corporate Author: International Monetary Fund
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 1989
Series:IMF Working Papers
Subjects:
Government And The Monetary System
Payment Systems
Finance
Debt Service
Debt Reduction
Regimes
Monetary Economics
Debt Management
Debt
Exports And Imports
International Lending And Debt Problems
International Economics
Debts, External
Money
Sovereign Debt
Debt Service Payments
Standards
Interest Payments
Currencies
Monetary Systems
Debt Restructuring
Financial Risk Management
Money And Monetary Policy
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
Description
Summary:This paper outlines a procedure for calculating the cash value of “menu items” in debt restructuring proposals, including par and non-par exchanges, with enhancements consisting of either interest or principal guarantees. It is argued that under certain plausible assumptions interest and principal guarantees are directly equivalent to cash buy-backs. Using these assumptions, formulas to calculate the exchange ratios, resource requirements, interest rates, and net debt reduction for particular menu items are derived. It is shown that there is not a direct relationship between the exchange discount and the market price
Physical Description:16 pages
ISBN:9781451960600

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