Under a debt-for-debt swap,a commercial bank sells its loans at a discount to a developing country government for local currency which it then uses to finance an equity investment in the debtor country.

Question

Quizplus · Accepted Answer

A debt-for-debt swap involves exchanging existing debt for new debt, not for local currency or equity investment. The described scenario is more akin to a debt-for-equity swap.

Under a Debt-For-Debt Swap,a Commercial Bank Sells Its Loans at a Discount