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Contracts

Securities Law

2014

Duke Law

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Full-Text Articles in Law

From Pigs To Hogs, Stephen J. Choi, Mitu Gulati Jan 2014

From Pigs To Hogs, Stephen J. Choi, Mitu Gulati

Faculty Scholarship

The question of whether, and to what extent, markets price contract terms in government bond issues has been one of considerable debate in the literature. We use a natural experiment thrown up by the Euro area sovereign debt crisis of 2010-2013 to test whether a particular set of contract terms – ones that gave an advantage to sovereign guaranteed bonds over garden variety sovereign bonds – was priced. These contract terms turned out to be important for the holders of guaranteed bonds during the Greek debt restructuring of 2012, where they helped the holders of guaranteed bonds escape the haircut that other ...