A Primer on Sovereign Debt Buybacks and Swaps

IMF Working Papers, March 1, 2007

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A Primer on Sovereign Debt Buybacks and Swaps

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Bibliographic details

• Authors: Magdalena Polan, Parmeshwar Ramlogan, Carlos I. Medeiros
• Published: March 1, 2007
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781451866223.001

Summary and purpose

• Sets forth basic principles to help debt managers in emerging market and other countries plan and implement sovereign debt buyback and swap operations.
• Discusses:
  • the macroeconomic context in which buybacks and swaps are undertaken,
  • the objectives of buybacks and swaps,
  • the analytical framework for deciding whether to undertake a particular buyback or swap operation and for selecting among alternative operations,
  • key issues in determining the strategy for executing buybacks and swaps.
• Focuses on developing the analytical framework for evaluating sovereign debt buyback and swap operations because very little work has been done in this area.
• Presents a step-wise decision-making procedure in which discounted cash flow analysis and the use of strategic benchmarks for the debt play central roles.

Analytical framework and evaluation tools

• Advocates a step-wise decision-making procedure for buybacks and swaps.
• Central analytical tools:
  • discounted cash flow analysis,
  • strategic benchmarks for the debt.
• Emphasizes selection among alternative operations based on the analytical framework.

Objectives and macroeconomic context

• Identifies objectives of buybacks and swaps as part of sovereign debt management (text describes objectives without enumerating them in the source).
• Situates operations within the macroeconomic context in which they are undertaken (text describes context without enumerating specific macro variables in the source).

Strategy and execution considerations

• Discusses key issues in determining strategy for executing buybacks and swaps (text notes strategy determination and execution considerations without listing specific tactical steps in the source).

Content in this bundle

• _wp0758 - Box 1: Risks Encountered in Sovereign Debt Management
  • _wp0758 - Box 1: Risks Encountered in Sovereign Debt Management (Markdown version)
  • _wp0758 - Box 1: Risks Encountered in Sovereign Debt Management (PDF)