What is a Secondary Market?

The secondary market in Least Developed Countries (LDC) debts is a market where banks or individual creditors sell their debts papers or loans on sovereign borrowers to any purchaser.

This mostly happens at a substantial discount from face value.
The secondary market began its life during the 1983-85 period. Sellers were at first hesitant and often secretive about their intention to sell. By the end of the 80's the market was measured in the billions of dollars. Selling pressure and other factors produced steep discounts on the credits of many countries. Some participant banks boasted openly of their intentions to shed at first opportunity the LDC debt in order to safeguard their stock prices.(1)

Actors on this Secondary Market are first of all

- the Sovereign borrowers or debtors. These are LDC that need to get loans. - Consequently you have the Banks as actors, through whom loans are arranged

- Also individual creditors or individual exporters are active on this Market when their commercial export hasn’t been paid.

- Funds that group or purchase sovereign debts have emerged as these funds offered solution to overdue debts.

- Of course the Debt collection agencies, which are mandated by the above-mentioned actors to try and solve the debts, have been very active in this market.