Backstop facility and Sovereign debt crisis: Difference between pages

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imported>Doug Williamson
(Add Backstop credit facility. Source - The Treasurer online - 8 July 2021 - https://www.treasurers.org/hub/treasurer-magazine/act-deals-of-the-year-awards-2020-special-covid-award-winner)
 
imported>Doug Williamson
(Add quote - source - IMF - https://www.worldbank.org/en/publication/wdr2022)
 
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A backstop facility is a short-term interim borrowing facility supporting a transaction, financial instrument, or other credit facility.
''Sovereign debt - sovereign risk - default.''


Widespread conditions of potential or actual default by indebted countries, with increased sovereign risk and losses for lenders.


:<span style="color:#4B0082">'''''Informa highly commended'''''</span>


:"Highly commended in this category was Informa's complex acquisition financing deal...
:<span style="color:#4B0082">'''''Debt sustainability problems worsen over time'''''</span>


:The deal, which was intended to support the company's transformation acquisition of UBM, included... an £855m backstop facility for Informa's RCF, and a £400m and $720m backstop facility for the RCF, US private placement and bond at UBM."
:"Sovereign debt crises are costly for sustained growth.  


:''The Treasurer magazine, Deals Edition 2019, p24.''
:One study finds that every year a country remains in default reduces its GDP growth by 1–1.5 percentage points.  


:High levels of sovereign debt also have significant social costs.


Also known as a ''backstop credit facility.''
:They reduce the government’s ability to spend on social safety nets and public goods such as education and public health, which can worsen inequality and human development outcomes.
 
 
:When debt sustainability problems are not resolved, they tend to worsen over time because the choices of each government constrain the options of future governments as more revenue is directed to debt service.
 
:Sovereign debt crises also frequently coincide with other types of economic crises — such as financial sector crises, rising inflation, and output collapses—that have far-reaching negative consequences for poverty and inequality."
 
:''International Monetary Fund - World Development Report 2022 - p204.''




== See also ==
== See also ==
* [[Bond]]
* [[Coronavirus crisis]]
* [[Bridge facility]]
* [[Default]]
* [[Bridge to bond]]
* [[eurozone crisis]]
* [[Bridging loan]]
* [[Forbearance]]
* [[Facility]]
* [[Global Financial Crisis]]
* [[Private placement]]
* [[Grexit]]
* [[RCF]]
* [[Gross Domestic Product]]  (GDP)
* [[Inequality]]
* [[Inflation]]
* [[International Monetary Fund]]  (IMF)
* [[Poverty]]
* [[Public goods]]
* [[Restructuring]]
* [[Sovereign]]
* [[Sovereign debt]]
* [[Sovereign risk]]
* [[Sustainability]]
 
 
==External link==
*[https://www.worldbank.org/en/publication/wdr2022 IMF - World Development Report - 2022]


[[Category:Corporate_finance]]
[[Category:The_business_context]]
[[Category:Long_term_funding]]
[[Category:Identify_and_assess_risks]]
[[Category:Cash_management]]
[[Category:Manage_risks]]
[[Category:Liquidity_management]]
[[Category:Risk_frameworks]]
[[Category:Risk_reporting]]
[[Category:Financial_products_and_markets]]

Revision as of 20:54, 22 September 2022

Sovereign debt - sovereign risk - default.

Widespread conditions of potential or actual default by indebted countries, with increased sovereign risk and losses for lenders.


Debt sustainability problems worsen over time
"Sovereign debt crises are costly for sustained growth.
One study finds that every year a country remains in default reduces its GDP growth by 1–1.5 percentage points.
High levels of sovereign debt also have significant social costs.
They reduce the government’s ability to spend on social safety nets and public goods such as education and public health, which can worsen inequality and human development outcomes.


When debt sustainability problems are not resolved, they tend to worsen over time because the choices of each government constrain the options of future governments as more revenue is directed to debt service.
Sovereign debt crises also frequently coincide with other types of economic crises — such as financial sector crises, rising inflation, and output collapses—that have far-reaching negative consequences for poverty and inequality."
International Monetary Fund - World Development Report 2022 - p204.


See also


External link