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  1. Hidden defaults
    Author: Horn, Sebastian; Reinhart, Carmen M.; Trebesch, Christoph
    Published: [2022]
    Publisher:  Kiel Institute for the World Economy, [Kiel]

    China’s lending boom to developing countries is morphing into defaults and debt distress. Given the secrecy surrounding China’s loans, also the associated defaults remain “hidden”, as missed payments and restructuring details are not disclosed. We... more

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    Location:
    Leibniz-Institut für Wirtschaftsforschung Halle, Bibliothek
    Inter-library loan:
    No inter-library loan

    Location:
    ZBW - Leibniz-Informationszentrum Wirtschaft, Standort Kiel
    Signature:
    DS 3
    Inter-library loan:
    No inter-library loan

     

    China’s lending boom to developing countries is morphing into defaults and debt distress. Given the secrecy surrounding China’s loans, also the associated defaults remain “hidden”, as missed payments and restructuring details are not disclosed. We construct an encompassing dataset of sovereign debt restructurings with Chinese lenders and find that these credit events are surprisingly frequent, exceeding the number of sovereign bond or Paris Club restructurings. Chinese lenders follow a resolution approach reminiscent of 1980s Western lenders; they seldom provide deep debt relief with face value reduction. If history is any guide, multi-year debt workouts with serial restructurings lie in store.

     
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    Source: Union catalogues
    Language: English
    Media type: Book
    Format: Online
    Other identifier:
    hdl: 10419/250079
    Series: Kiel working paper ; no. 2208 (January 2022)
    Subjects: China; external debt; default; crisis resolution; official lending; hidden debts; sovereign risk; Belt and Road initiative
    Scope: 1 Online-Ressource (circa 23 Seiten), Illustrationen
  2. Currency concentration in sovereign debt, exchange rate cyclicality, and volatility in consumption
    Author: Fujii, Eiji
    Published: November 2022
    Publisher:  CESifo, Munich, Germany

    For emerging economies, borrowing abroad is a double-edged sword: it can buffer against adverse economic shocks and smooth their domestic consumption; however, it can also amplify volatility in consumption, depending on the currency in which the debt... more

    Access:
    Verlag (kostenfrei)
    Verlag (kostenfrei)
    Resolving-System (kostenfrei)

    Location:
    ZBW - Leibniz-Informationszentrum Wirtschaft, Standort Kiel
    Signature:
    DS 63
    Inter-library loan:
    No inter-library loan

     

    For emerging economies, borrowing abroad is a double-edged sword: it can buffer against adverse economic shocks and smooth their domestic consumption; however, it can also amplify volatility in consumption, depending on the currency in which the debt is denominated and cyclicality in the borrower’s exchange rate. We empirically investigate the nexus among external debt portfolios, exchange rate cyclicality, and volatility in consumption of low- and middle-income countries. Since 1980, many countries have concentrated their external debt portfolios’ currency composition. By constructing debt-weighted effective exchange rates, we find that currency concentration magnifies exchange rate pro-cyclicality, making domestic consumption more volatile when national income fluctuates. Our results endorse diversifying the currency composition of external debt to mitigate the negative consequences of “original sin.”

     
    Export to reference management software   RIS file
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    Source: Union catalogues
    Language: English
    Media type: Book
    Format: Online
    Other identifier:
    hdl: 10419/267307
    Series: CESifo working papers ; 10074 (2022)
    Subjects: external debt; currency portfolio; original sin; exchange rate cyclicality; volatility in consumption
    Scope: 1 Online-Ressource (circa 44 Seiten), Illustrationen