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The Seniority of Creditors in Sovereign Debt Restructurings

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2026-07

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Mossavar-Rahmani Center for Business & Government
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Baqir, Reza, and Ali Hakim. "The Seniority of Creditors in Sovereign Debt Restructurings." M-RCBG Associate Working Paper Series 2026.280, Cambridge, MA, July 2026.

Abstract

The norms surrounding the seniority of official-sector creditors in sovereign debt restructurings contain significant ambiguities. As a result, stakeholders often disagree about the relative treatment of different institutions, delaying the restructuring process and potentially increasing the cost of official-sector financing for emerging market countries. This paper proposes a transparent and tractable framework for guiding the seniority of official claims. The framework would facilitate timely resolution of debt crises and incentivize concessional development finance.

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finance, debt, sovereign debt, IMF, debt restructuring, emerging markets

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