Price of the currencies of privatisation: the effect of different interest rates

Abstract This article develops some formulas to calculate the difference between the price of the currencies of privatization (so-called “junk money”) in the secondary market and their face value. A matrix of results, based on different rules of payment of public debt, and several costs of opportunity (rates of discount) is exposed. The results are useful to distinguish the effect of differences between the rate of interest of the privatization currencies and the expected free-market rate of interest from the effect caused by the lack of government credibility.