Honduras Bond-Default Threat Was Not Just Some Innocent Mistake

When Honduran President Xiomara Castro sent the bond market into a tailspin just minutes after taking office last month, it all seemed like some big misunderstanding.

That same day, Pedro Barquero, Castro’s economy minister, rushed to clarify that she had meant to say in her inaugural address that the government should “refinance” its debts, not “restructure” them. This was plausible enough. Politicians not steeped in the intricacies of high finance have been mixing those two words up for decades. (The former is a common, straight-forward transaction; the latter is effectively a default.)