Excess Returns on Emerging Market Bonds and the Framework for Sovereign Debt Restructuring

This paper examines the emerging market bonds from the early 1990s to mid 2000s to better understand how risk is shared between a debtor and its creditors under the current international process for sovereign bankruptcy. Two distinct, but related, questions are asked: how much have creditors have been able to recover on their investments in the case of restructurings, and, more broadly, whether the emerging bond market has paid investors an excess return over time.