15-42 One advantage of swapping a sovereign loan for a bond is the capability to sell the bond in the secondary market.

Question

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When a sovereign loan is swapped for a bond, the bond has the advantage of being traded in the secondary market, providing more flexibility to the creditor to sell the bond if needed. This is not the case with a sovereign loan, which is more difficult to transfer or sell.

15-42 One Advantage of Swapping a Sovereign Loan for a Bond