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CONVERSION DEUDA-CAPITAL EN CHILE

Ricardo Ffrench-Davis
Cuadernos de Economía
Año 27, No. 82 (Diciembre 1990), pp. 407-427
Stable URL: http://www.jstor.org/stable/41951198
Page Count: 21
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Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
CONVERSION DEUDA-CAPITAL EN CHILE
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Abstract

The analysis of debt-equity swaps operated in Chile since 1985 shows or suggests that: 1) In a debt-led recession, the common belief that DFI net transfers are countercyclical tends to be wrong. 2) Roughly 70% of the discount of debt notes in international markets has been captured by the foreign investor. The implicit exchange-rate for them has been 46% larger than for domestic producers and DFI in cash. This is a distorting discrimination. 3) In debt-led crises, domestic firms tend to be "under-priced" in foreign currency, thus reinforcing the "windfall gains" for swappers. 4) The economic rent s captured by investors have contributed to create a supportive mood in the business community, and an improved knowledge about investment opportunities in Chile. 5) Debt-equity swaps have postponed capital service, but expected profit remittances are larger than the corresponding interest payment reduction. 6) Notwithstanding sizable swaps, overall domestic capital formation has been low, suggesting that a significant share of swaps have involved a transfer of existing productive capacity.

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