We develop a sovereign debt model with ocial and private creditors where the probability of default depends on both the level and the composition of liabilities. Higher exposure to ocial lenders improves incentives to repay but carries extra costs, due to overcharging or reduced ex-post exibility. The model implies that ocial lending to sovereigns takes place in times of debt distress; carries a favorable rate; and can displace private funding even under pari passu provisions. Moreover, in the presence of long-term debt overhang, the availability of ocial funds increases the probability of default on existing debt although default does not trigger exclusion from private credit markets. These ndings help shed light on joint default and debt composition choices such as those observed during the recent sovereign debt crisis in Europe. JEL class: F34, H63