The outcome of a leveraged buyback of sovereign debt is shown to depend on the seniority structure of the deal. If the institution lending the funds needed for the buyback is given seniority over existing bondholders, the debtor country benefits from the deal and the market price of bonds declines. The opposite holds if the lending institution is junior: in this case the buyback benefits bondholders, since the value of their claim increases. These results do not depend on the share of country's wealth devoted to debt repayment, which instead plays a crucial role in shaping the outcome of unlevered buybacks, as it is shown in the traditional literature.