Key points

• Value recovery mechanisms are a subset of sovereign state-contingent debt instruments (SCDIs). Within this category is a further subset: the freestanding value recovery instrument (VRI). This is a restructuring tool that has typically been either geared to a single factor trigger (such as petroleum prices) or a broad macro trigger (GDP). It is constructed in order to trade freely from the outset or is detachable from the related restructuring credits over time. It is designed to compensate creditors for granting debt reduction in the restructuring process.
• Recent history has not been kind to VRIs. This promising mechanism in its current iteration has attracted negative feedback from the market and negative reviews in academic and policy circles. The primary focus of this bad press is the difficulty in valuation due to complexity, lack of standardization and perceived flaws in structure. In addition, the lack of benchmarks for normal market SCDIs has contributed to the problem. Curing these deficiencies, it is believed, would address the valuation issue.
• The article contends that valuation, already a challenge, is further complicated by tradability as, among other factors, it adds another party to the table beyond debtor and creditor—the third-party secondary market participant. The article further elaborates upon other problematic results of the tradability feature of the VRIs.
• A set of measures is proposed to improve the effectiveness of VRIs and to eliminate additional negative consequences with the aim that the VRI will benefit both creditor and debtor interests.
• Recognition is given that the proposal sets a very high bar for the use of VRIs in pure bond restructurings but that those cases have proven to be problematic for debtor and creditor alike. In this connection, the article notes that a number of countries have no or a limited amount of bond exposure and that the proposed strategy may have its most important impact in that context.

中文翻译：

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价值恢复工具：逆势命题

关键点

• 价值恢复机制是主权国家或有债务工具 (SCDI) 的一个子集。此类别中还有一个子集：独立价值回收工具 (VRI)。这是一种重组工具，通常面向单一因素触发因素（例如石油价格）或广泛的宏观触发因素（GDP）。它的构建是为了从一开始就可以自由交易，或者随着时间的推移可以从相关的重组信贷中分离出来。它旨在补偿债权人在重组过程中减免债务。
• 最近的历史对 VRI 并不友好。这种有前途的机制在当前迭代中引起了市场的负面反馈以及学术界和政策界的负面评论。这种坏消息的主要焦点是由于复杂性、缺乏标准化和结构上的缺陷而难以估值。此外，缺乏正常市场 SCDI 的基准也导致了这个问题。据信，解决这些缺陷将解决估值问题。
• 这篇文章认为，估值已经是一个挑战，但由于可交易性的影响，它进一步复杂化了，因为除其他因素外，它还增加了债务人和债权人之外的另一方——第三方二级市场参与者。本文进一步阐述了 VRI 的可交易性特征的其他有问题的结果。
• 提出了一套措施来提高 VRI 的有效性并消除额外的负面影响，目的是 VRI 将有利于债权人和债务人的利益。
• 承认该提案为在纯债券重组中使用 VRI 设定了非常高的标准，但这些案例已被证明对债务人和债权人都存在问题。在这方面，文章指出，一些国家没有或只有有限数量的债券敞口，拟议的战略可能在这种情况下产生最重要的影响。