This paper tests whether the August 1982 advent of the Latin American debt crisis affected the implicit value of commercial bank loans to major Latin American debtors and hence, the value of equities. In contrast to previous studies, the analysis provides an explicit derivation of the theoretical impact of such an effect, uses a more efficient pooled cross-sectional, time-series estimating technique, addresses the question of whether (ex ante) required returns on bank equities also were affected, and compares the estimates to the behavior of the direct market for Latin American bonds. The results imply that the crisis did cause significant debt discounting as well as an increase in required returns. However, unlike the bond market, most of this equity effect was delayed 6–9 months.