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If I were to buy a bond of Argentina, like AL30, it is worth ~30 cents for every dollar, if I understand correctly, this means that, if the country required more money and issues more bonds the value of the debt would be that of 30 cents to the dollar, or less. This means that the interest payed on the debt is very high, making taking debt, even when necessary, very expensive.

Are there any historical examples where this kind of loan interest rates were reduced, so that countries that had to pay high interest reduced their interest?

Let me know if I messed something up about the economics involved.

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    $\begingroup$ Google Brady Bonds for example where lenders accept losses on face value or reduced interest rates (I think the later is what you ask?). $\endgroup$
    – AKdemy
    yesterday
  • $\begingroup$ @AKdemy I am not understanding why those interest are better than the interests offered before? Was there an explicit guarantee that lenders would inevitably get the loan payments one way or the other? $\endgroup$ yesterday
  • $\begingroup$ The link mentions the "basic tenets". You cannot guarantee you get payments for sure, that would be magic. Any (even perceived) reduction in risk reduces interest rate payments. Essentially every EURO currency country that had problems with inflation reduced interest payments significantly by joining the EURO area. $\endgroup$
    – AKdemy
    4 hours ago
  • $\begingroup$ "greater assurance of collectability in the form of principal and interest collateral", what kinds of collateral were used? "some assurance of economic reform" what kinds of reform? "the resulting debt should be more highly tradable" aren't bonds like AL20 tradable enough already? $\endgroup$ 30 mins ago

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