Hurricanes don’t just destroy cities: they can also destroy sovereign finances. Hurricane Ivan, for instance, wiped out so much of Grenada’s infrastructure in September 2004 that by the end of the year the country was in default on its debt. Things were not helped when Hurricane Emily struck Grenada in July.
The Grenadian government tapped Bear Stearns to put together a comprehensive restructuring package, which was successfully completed in mid-October. Most distressed sovereigns make a distinction between domestic and foreign debt, either in terms of governing law or in terms of currency.
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