Wow! Mind blown! Has this ever happened before (issue high interest rate debt to buyback lower rate, discounted debts)? The financial chicanery never ceases to amaze.
Definitely wouldn't be a first. The research experts on this topic like Calomiris (link to paper below) suggest that the one-time gain to the sovereign issuer from debasing the existing long term debt at low coupons is a common phenomenon. So this "windfall" is pretty common as the public debt problem materializes ... but the issuer only gets to pull this fleecing of the bondholders once (after they get hit by the unexpected inflation, market price of debt moves up to reflect the risk).
If you dive into his references, I'd bet you'll find walkthroughs of other sovereign debt situations where this took place. It's a great read:
Wow! Mind blown! Has this ever happened before (issue high interest rate debt to buyback lower rate, discounted debts)? The financial chicanery never ceases to amaze.
Definitely wouldn't be a first. The research experts on this topic like Calomiris (link to paper below) suggest that the one-time gain to the sovereign issuer from debasing the existing long term debt at low coupons is a common phenomenon. So this "windfall" is pretty common as the public debt problem materializes ... but the issuer only gets to pull this fleecing of the bondholders once (after they get hit by the unexpected inflation, market price of debt moves up to reflect the risk).
If you dive into his references, I'd bet you'll find walkthroughs of other sovereign debt situations where this took place. It's a great read:
https://files.stlouisfed.org/research/publications/review/2023/06/02/fiscal-dominance-and-the-return-of-zero-interest-bank-reserve-requirements.pdf