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Considerations in the Choice of the Appropriate Discount Rate for Evaluating Sovereign Debt Restructurings

Assessments regarding the effectiveness of sovereign debt restructurings are often summarized by comparisons of the net present value of debt service before and after the restructuring. These calculations are inherently sensitive to the choice of discount rate. This paper explores issues that arise...

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Bibliographic Details
Main Author: Kozack, Julie
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2005
Series:IMF Policy Discussion Papers
Subjects:
Interest Rates
Finance
Debt Service
Discount
Financial Services
Debt Management
Debt
Exports And Imports
Asset And Liability Management
International Lending And Debt Problems
International Economics
External Debt
Debts, External
Yield Curve
Sovereign Debt
International Financial Markets
Discount Rates
Banks And Banking
Debt Restructuring
Debt Sustainability
Interest Rates: Determination, Term Structure, And Effects
Financial Risk Management
Uruguay
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
Description
Summary:Assessments regarding the effectiveness of sovereign debt restructurings are often summarized by comparisons of the net present value of debt service before and after the restructuring. These calculations are inherently sensitive to the choice of discount rate. This paper explores issues that arise in selecting discount rates when evaluating sovereign debt restructurings. It suggests using a range of discount rates and centering the analysis around the internal rate of return to assess whether the debt restructuring has generated net present value savings or costs to the debtor
Physical Description:29 pages
ISBN:9781451975840

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