Restructuring Vietnam’s Foreign Commercial Debt through Brady Bonds

Abstract

As an aftermath of the 1973 oil shock, many commercial banks suddenly found themselves with sizable amounts of funds deposited by oil producers. In the rush to recycle that cash, many banks lent to the governments of less developed countries ("LDCs"). In the early 80's, when many commodity prices fell, the terms of trade swung drastically against many LDCs. As a consequence, they suffered from a shortage of funds which was gapped by additional borrowings, thereby compounding the problem. Furthermore, since much of the borrowing was done at floating interest rates, when rates began to rise, this furthered hindered the capacity of LDC borrowers to service their debt obligations...