BEGIN:VCALENDAR
VERSION:2.0
PRODID:-//Talks.cam//talks.cam.ac.uk//
X-WR-CALNAME:Talks.cam
BEGIN:VEVENT
SUMMARY:Inventing a secondary market for sovereign debt in later medieval 
 England - Dr Tony Moore\, University of Reading\, ICMA Centre
DTSTART:20120123T170000Z
DTEND:20120123T190000Z
UID:TALK35552@talks.cam.ac.uk
CONTACT:D'Maris Coffman
DESCRIPTION:The modern sovereign debt markets are a key component of the g
 lobal financial system and global sovereign debt issuance for 2012 may exc
 eed $7 trillion. A major attraction of sovereign debt for investors is the
  flexibility to buy and sell on an extensive and liquid secondary market. 
 Although not comparable to their modern counterparts in scale or complexit
 y\, recent historiography has emphasised the relative sophistication of me
 dieval financial markets. For example\, shares in the sovereign debt (mont
 i) of the financially-precocious Italian city states of Florence\, Genoa a
 nd Venice were traded on a remarkably open and transparent secondary marke
 t. The situation in England was less clear-cut\, however\, largely because
  of the variety of ways that the English kings could issue debt and how th
 ese were subsequently recorded by the Exchequer. The first part of this pa
 per will describe the different classes of English sovereign debt instrume
 nt and set out the evidence for their trading on a secondary market\, albe
 it opaque and OTC. It will concentrate on the key period between 1250 and 
 1350 when recurrent financial crises\, largely driven by military expendit
 ures\, led to an explosion in outstanding government debt. This\, in turn\
 , stimulated innovations in the trading of such debt. In the 1340s\, indee
 d\, the purchase by leading royal financiers of wardrobe debentures and th
 e infamous Dordrecht bonds from less well-connected royal creditors formed
  an integral part of the royal financial system. Edmund Fryde has estimate
 d that as much as £84\,000-worth of distressed debt was redeemed in this 
 way between 1343 and 1355.\n\nIt is clear that the various debt instrument
 s issued by the English kings were routinely bought and sold at a discount
 . Unfortunately most of this evidence for this is anecdotal or tangential 
 in nature and omits key information. Under the system of single-entry or c
 harge-discharge accounting used by the medieval Exchequer\, for instance\,
  when a bond or tally purchased at a discount was presented to the issuer 
 for redemption\, it was entered in the accounts at par value. This makes d
 etailed financial analysis of these transactions problematic. However\, th
 ere are a small number of cases that do provide with the necessary data. O
 ccasionally the English kings themselves engaged in buying up their own de
 bts at a discount\, which was described as a remissio (remittance or relea
 se) in the royal accounts. It took two main forms: first\, a royal credito
 r could release or quitclaim a portion of the total debt owed to him in re
 turn for speedier repayment of the remainder\; and second\, a holder of a 
 royal money fief (effectively an annuity) could release that fief to the k
 ing (often with accumulated arrears) in return for a lump-sum payment. The
  second part of this paper will analyse these remissiones\, with the aim o
 f calculating the implicit discounts at which the English kings bought up 
 their own debt and examining what factors may have determined these discou
 nts.\n
LOCATION:Lucia Windsor Room\, Newnham College
END:VEVENT
END:VCALENDAR