Eduardo Borensztein, Ugo Panizza

Sovereign debt is different from private debt because creditors do not have a well defined claim on the sovereign’s assets. The lack of a procedure for enforcing sovereign debt contracts is partly due to the principle of sovereign immunity. However it also relates to the fact that, even when creditors obtain a favorable ruling, they cannot attach assets which are located within the borders of the defaulting country, and in fact have had limited success in going after assets located abroad.