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A. Erce, E. Mallucci, M. Picarelli: A Journey in the History of Sovereign Defaults on Domestic Law Public Debt

We introduce a novel database on sovereign defaults that involve public debt in- struments governed by domestic law. By systematically reviewing a large number of sources, we identify 132 default and restructuring events of domestic debt instruments, in 50 countries from 1980 to 2018. Domestic law defaults are a global phenomenon. Overtime, they have become larger and more frequent than foreign law defaults. Do- mestic law debt restructurings are achieved faster than foreign ones, often trough ex- tensions of maturities and amendments to the coupon structure. Face value reductions are rare. Unilateral amendments and post-default restructuring are the norm, but ne- gotiated pre-default restructurings are being increasingly used. Finally, we document that domestic defaults are widely heterogeneous. As such, we complement this pa- per with a collection of documents, named “sovereign histories”, that provide the fine details about each default episode.

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