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Involving the Private Sector
Involving the Private Sector
In Forestalling and Resolving Financial Crises
Prepared by the Policy Development and Review
Department, International Monetary Fund

March 17, 1999


Available in PDF (360 K)

Contents

Summing Up by the Acting Chairman, Executive Board Meeting, March 17, 1999

Preface

Part I. Foreground
Prevention
Measures to Facilitate the Private Sector's Involvement in
     Forestalling and Resolving Financial Crises
Concluding Observations

Part II.  Background
Managing Risk and Liquidity in Volatile emerging Debt Markets
      Embedding Derivatives in Debt Contracts
      Private Sector Contingent Financing Arrangements
      Use of Derivatives in Debt Instruments to Provide Insurance
External Debt Monitoring and Concerted Rollover of Short-
   Term Debt
      Coverage of Debt Monitoring
      Use of Data Collected by Monitoring Systems
      Concerted Rollover Operations
Restructuring International Sovereign Bonds
      General Considerations
      Possible Modalities of Bond Restructuring
      Restructuring Brady Bonds
      Restructuring Bonds Supported by Liens on Borrowers'
         Assets
      Modification of Bond Contracts
      Experience with Quasi-Sovereign and Sovereign Bond
         Restructuring
Official Enhancements of Emerging Market Debt Instruments
      Official Enhancements to Attract New Money:
         General Considerations
      Recent Examples of Credit Enhancements
      Official Support for Debt Restructuring
Tables
  1.1
Progress on Previously Identified Measures to Improve Private Sector Involvement in Forestalling and Resolving Financial Crises
  2.1
Bonds That Can Be Put for Emerging Markets, 1999–2000
  2.2
Loans That Can Be Put for Emerging Markets, 1999–2000
  2.3
Maturing bonds Issued by Emerging Markets and Sectors,
1999–2000
  2.4
Selected Bond Restructurings
Figures
  2.1
International New Bond Issues and Bond Redemptions
    By Developing Country Sovereign Borrowers
  2.2
International New Bond Issues and Bond Redemptions
   By Developing Country Nonsovereign Borrowers
Boxes
  2.1
Derivatives and Balance of Payments Crises
  2.2
Design of Monitoring Systems
  2.3
Korea
  2.4
Indonesia, Thailand, and Brazil
  2.5
Comparison Between Legal and Institutional Factors
  2.6
The IBRD's New Policy on Guarantees
  2.7
World Bank Guarantee of Hungarian Bond
  2.8
Liquidity Puts
  2.9
The World Bank EGAT Rolling Coupon Guarantee