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Sovereign Debt – Towards More Complex and Costly Capital Structures?

The liability side of a sovereign’s balance sheet has historically been simple, certainly as compared to banks and, to a large extent, corporates. This is changing, especially for emerging and frontier-market economies. Their capital structures are becoming increasingly complex because of an intricate and largely implicit hierarchy of claims, and because of the proliferation of contingent instruments that generally make their debt less predictable. […]