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Sovereign Debt Default

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A Sovereign Debt Default occurs when a sovereign country defaults on its debts

Countries That Have A History Of Defaulting On Their Sovereign Debt

Common Sovereign Debt Default Characteristics
  • Tend to occur under all types of government styles, economies, political regimes, monetary policies, etc.
  • Low Interest rates are a common warning indicator (they lead to a search for yield)
    • Investors in countries with a low yield search for higher yields in other countries
    • The capital inflows lower rates in the debtor countries
    • The debtor countries end up taking on too much debt and end up defaulting

Significant Periods of Sovereign Debt Default

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