Broadly speaking, sovereign debt restructuring is the technique used by sovereign states to prevent or resolve financial and economic crises and to achieve debt sustainability levels. Most sovereign debt is documented by bond issuances (either domestic or international). Multilateral debt is not restructured and bilateral debt is usually rescheduled or restructured under the aegis of the Paris Club.
Sovereign debt restructuring has two aspects: procedural and substantial. While the procedural aspect focuses on the way in which the restructuring should be performed (eg via an exchange offer, sometimes enhanced by the use of other techniques), the substantial aspect involves the actual restructuring of debt, which is characterized by rescheduling amortization schedules as well as the possibility of reducing interest rates and/or principal by means of a post-default voluntary exchange offer.
Another available option is a debt re-profiling, a voluntarily exchange...
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