25

Sovereign bonds are usually priced under the assumption that only the issuer may be responsible of their repayment. In some cases however, bondholders may legitimately expect to be repaid by more than one agent. This paper first discusses the theoretical financial implications stemming from an infrequent and challenging situation, namely the existence of multiple potential payers. Then, through a historical precedent, the 1918 Russian repudiation, the paper confirms that the existence of multiple payers has a diversification effect which lowers the volatility of the bond price and increases its value. These results are strengthened by a comparison with a closely related standard case of default.