While there is no universally accepted definition, a sovereign debt restructuring can be defined as an exchange of outstanding sovereign debt instruments, such as loans or  bonds, for new debt instruments or cash through a legal process. Sovereign debt, refers to debt issued or guaranteed by the government of a sovereign state. The debt restructuring is based on agreements with the creditor countries (see the Paris Club, London Club, International Monetary Fund - IMF).

One can generally distinguish two main elements in a debt restructuring:

-Debt rescheduling, which can be defined as a lengthening of maturities of the old  debt, possibly involving lower interest rates. Debt reschedulings imply debt relief, as they shift contractual payments into the future;  

-Debt relief, which can be defined as a reduction in the face (nominal) value of the old instruments.

Editor: Giovanni AVERSA