DEBT FOR EQUITY SWAP

Debt for Equity Swap: translation

   When a debtor country, usually with economic problems or a deteriorating credit rating, uses its local currency to buy back its foreign debt at a discount in line with market conditions. Creditors then use that local currency to invest in companies in the debtor country, turning there debt into equity. The debtor country is then said to have securitized its debt. The term is also used when a company cannot meet payments on its debt and exchanges the debt for shares in the company.