| During the 1990s as emerging market sovereigns shifted increasingly from bank debt to bonds for their capital needs, the pessimists painted a desolate picture in the case of a future default. They foresaw sovereigns locked out of the market for years as bondholders argued about restructuring and fought for compensation through the courts. The bad publicity would ensure that a defaulting sovereign was unable to sell its bonds to private investors for decades. How both investors and issuers would long to return to the bank debt era, reasoned these analysts, when only a few parties were involved in the negotiations and, with patience, all the problems could be solved. |
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