This doesn't work for many reasons, including that the market now knows the gov might attempt a buyback. To the extent that the market is forward-looking, Leb won't gain from buybacks. Also:

1) The market would see the purchases as a +ve signal and the price of bonds would rise.
2) Use of scarce funds to buy back and retire some of the debt will increase the price of the remaining debt and make a future restructuring more expensive.

3) Experience of debt restructurings in last 20 years teaches that what works are exchange offers, not buybacks.
4) The analysis remains the same if the country finances the debt buyback with new senior debt instead of cash.

5) For a buyback to make sense for a country, it must either receive grants to cover part of the cost, or else receive some other substantial negotiating concessions.
6)The Bolivian experience of 1988 illustrates the pitfalls of debt buybacks and the failure of such a strategy.

7) The comprehensive debt restructuring plan advocated by some economists continues to be preferable than any "muddling through" approach.

• • •

Missing some Tweet in this thread? You can try to force a refresh

Keep Current with Rand Ghayad رند غيّاض

Rand Ghayad رند غيّاض Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!


Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

Did Thread Reader help you today?

Support us! We are indie developers!

This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!

Follow Us on Twitter!