Jurisdiction(s):
United Kingdom

Key definition

Sovereign debt definition

What does Sovereign debt mean? Sovereign debt describes the financial obligations of a state’s central government to its creditors, typically documented as tradable securities (government bonds, notes and Treasury bills) or as loans. In UK practice it refers to liabilities of HM Treasury issued as gilts and Treasury Bills via the Debt Management Office; related fiscal measures use “government debt” or “public sector net debt”. In Ireland it aligns with the Exchequer’s National Debt managed by the NTMA, comprising Irish Government Bonds and Treasury Bills. The expression is descriptive rather than a term defined in UK or Irish statute, though related fiscal terms are. Key legal...

Sovereign debt restructuring: financing sources, creditor co‑ordination challenges, holdouts, CACs and exit consents, with recent developments (UN principles, G20 DSSI/Common Framework) and lessons from Greece

Published by a LexisNexis Restructuring & Insolvency expert

Practice notes

Sources of financing

Sovereign borrowers, whether emerging or advanced, raise funds via multilateral, bilateral, or private channels. The first two typically take the form of loan agreements. Private funding most often relies on bond placements and is the predominant avenue; at times it may involve commercial loan contracts, but because creditor groups are small these are negotiated discreetly and largely pass unnoticed. As bond issuance has surged, and virulent financial crises have become more frequent, bond restructurings have taken on greater prominence, particularly for sovereign issuers.

Difficulties with Sovereign debt restructuring

Reliance on Bonds to cover sovereign deficits has broadened and deepened capital markets. Yet major drawbacks emerge when obligations turn unsustainable. These include:

a growing, anonymous creditor base that is hard to co-ordinate
multiple instruments and issuance across diverse legal venues, with no unified statutory regime, which strengthens creditors’ capacity to hold out or litigate for improved terms

Moreover, past sovereign debt crises or episodes have displayed greater aggressiveness from...

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Professor Rodrigo Olivares-Caminal

Queen Mary University of London

Rodrigo Olivares-Caminal is a Professor in Banking and Finance Law at the Centre for Commercial Law Studies (CCLS) at Queen Mary University of London. Prior to joining CCLS he was a Senior Lecturer in Financial Law and the Academic Director at the Centre for Financial and Management Studies (SOAS), University of London and the School of Law, University of Warwick. He taught in undergraduate and postgraduate courses in various Schools of Law and Business Schools in the United Kingdom, Spain, Greece, France and Argentina as well as in professional training courses in Africa, Asia and Europe. Rodrigo has acted as a Sovereign Debt Expert for the United Nations Conference on Trade and Development (UNCTAD), Senior Insolvency Expert for the World Bank / IFC and as a consultant to several multilateral institutions in Washington DC and Europe, Central Banks and Sovereign States as well as in...

Web page updated on 21/05/2026

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