debt for equity swaps occur when foreign currency loans are swapped for the foreign currency equity in certain types of investments.

describe multi-year restructuring agreements / adv / disadvantages...

define formula for concessionality:

MRYA's are used when a country is unable to maintain it's payment schedule and the fin inst opts to keep the loan on its balance sheet rather than selling or swapping it for equity or debt.

Primary issue for fin inst is how much it is willing to give up to the borrower in the sovereign loan rescheduling.

Concessionality = (PV of original loan) - (PV of restructured loan)

benefits to the seller:

- loan is eliminated from the balance sheet freeing up funds for other investments

- losses provide a tax loss for the lender which, in effect, is subsidized by the government

- indicate that the bank is strong enough in the rest of hte balance sheet to absorb teh loss

---- major cost is having to sell the LDC loans at a discounted price. cost is the difference after taxes between teh face value of hte loan and the market value of the loan which is actualy sold.

brady bonds... banks exchange US dollar loans for dollar bonds issued by the sovereign.

major cost of swapping a bond fora loan is extending the maturity.