Hastings International and Comparative Law Review


Since the onset of the debt crisis, developing countries have resorted to several debt reduction and debt management techniques in order to sustain their debt servicing. One of the most popular of such techniques is debt-equity swaps. Its popularity is illustrated by the fact that several countries have either implemented formal debt-equity swap programs or are contemplating doing so. Despite the popularity of this technique, it is important to note that the features of each program are designed to suit the needs of each debtor country. Accordingly, the modalities for converting foreign debt to equity vary from country to country.

This Article examines the different modalities for converting foreign debt into equity in five major debtor countries: namely, Chile, Brazil, Argentina, Mexico, and the Philippines. Using the common features of the various debt conversion programs, it analyzes the impact of such debt conversion programs on the debt reduction efforts of these countries and on their economies at large.