Hidden Defaults
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. This paper constructs an encompassing dataset of sovereign debt restructurings with Chinese lenders and finds 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.
Main Authors: | Horn, Sebastian, Reinhart, Carmen M., Trebesch, Christoph |
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Format: | Working Paper biblioteca |
Language: | English |
Published: |
World Bank, Washington, DC
2022-02
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Subjects: | DEBT SUSTAINABILITY, DEBT SERVICE BURDEN, CHINESE LENDING, DISCLOSURE, SOVEREIGN DEBT, DEBT RESTRUCTURING, DEBT RELIEF, |
Online Access: | http://documents.worldbank.org/curated/en/773311643912553263/Hidden-Defaults http://hdl.handle.net/10986/36965 |
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