摘要：This paper analyzes the dynamics of secondary market prices of sovereign debt under alternative market-based debt conversion schemes. In the framework of a porrfolio model for rational forward-looking asset holders, the trajectories of secondary market prices are shown to be very sensitive to debtor country welfare (wealth) gains derived from the debt swaps. These gains will arise if debt conversion is (partially) foreign financed or if the debtor country's cost of the debt exceeds the secondary market price.
