My analysis of Mexican rescheduling begins with the country's political independence from Spain in 1821. As with most new-born countries, Mexico experienced the growing pains of domestic turmoil as it sought to establish itself as a sovereign country. In Mexico's case, the gap between gaining independence and sustaining a financially and politically viable nation-state was large. In its first 35 years, Mexico experienced more than 40 changes of political leadership along with chronic financial problems. Unable to raise revenues domestically, Mexico contracted sterling loans in 1824 and 1825 to meet its general financial needs and procure military equipment for defense against possible reconquest. Servicing these bonds with Mexico's own revenues, however, proved impossible. For the first few years payments came from the reserve funds of the banking houses that floated these loans on the London market. When these funds ran out in 1827, Mexico ceased its debt service.

This breach of contract was the first in a 60-year sequence of readjustment schemes and suspensions in debt servicing. Mexico also incurred other foreign debts in connection with property losses of foreign nationals, which resulted in years of convention negotiations with Great Britain, France, the U.S., and Spain. The type and severity of the breaches of contract varied, but suspension of interest payments and government intervention affecting security pledges were common. Solutions to the problems frequently included interest capitalization (converting overdue interest into principal), but on the whole, the most popular approach was debt conversion.