The legacy of these vulture funds complicates efforts to help African countries deal with their current debt challenges.
The Paris Club, which represents many bilateral official creditors, and the Institute for International Finance, which represents 450 banks and financial investment firms, have announced that they are collaborating on an initiative to temporarily suspend debt payments by the poorest countries.
The African Union and United Nations Economic Commission for Africa have announced that they are looking at the feasibility of creating a special purpose vehicle that can swap African bonds for debt instruments with more generous terms.
This is a problem because, given the severity of the current crisis, many bondholders are likely to be attracted to the option of selling their discounted bonds to vulture funds rather than participating in any future African debt restructurings.
Unless the special purpose vehicle can buy a critical mass of outstanding African bonds, the vulture funds will still complicate future debt renegotiations.
