Rescheduling a sovereign debt: expected repayment, risk and time preference

By assuming that the probability of default increases with the debtservice burden, it is shown that the set of admissible rescheduling schemes of a sovereign debt to a private creditor can be depicted by a U-shaped curve in the plane spanned by the renegotiated annual debt repayment and the renegotiated length of the repayment period. By classifying creditors and debtors by risk and time preference, the choice of a rescheduling scheme from this set and the likelihood of agreement is analysed for eighty-one possible combinations of creditors and debtors (JEL F34)