Serious Sovereign Defaults Looming

MIAMI â?? When it comes to sovereign debt, the term â??defaultâ? is often misunderstood. It almost never entails the complete and permanent repudiation of the entire stock of debt; indeed, even some Czarist-era Russian bonds were eventually (if only partly) repaid after the 1917 revolution. Rather, non-payment â?? a â??default,â? according to credit-rating agencies, when it involves private creditors â?? typically spurs a conversation about debt restructuring, which can involve maturity extensions, coupon-payment cuts, grace periods, or face-value reductions (so-called â??haircutsâ?).