DP273 Foreign Lending in the Interwar Years: The Bondholders' Perspective

Author(s): Barry Eichengreen, Richard Portes
Publication Date: September 1988
Keyword(s): Foreign Bonds, International Debt, Sovereign Borrowing
JEL(s): 041, 433, 441
Programme Areas: International Macroeconomics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=273

This paper revises and extends our previous (1986) analysis of rates of return on sterling and dollar foreign loans of the 1920s. It analyzes a larger sample of 250 dollar bonds and 125 sterling issues, covering the years 1920-9. Internal rates of return are adjusted for repurchases of discounted foreign bonds. The larger sample confirms the main conclusions of our original study and enables us to paint a richer picture of interwar experience with foreign loans. We also analyze determinants of ex ante spreads on foreign loans relative to risk-free returns, and assess the sophistication of investors.