This paper analyses the reasons why most Latin American governments frequently defaulted on their debts during the 19th century. Contrary to previous works, which focused on domestic factors, I argue that supply-side factors were equally important. The regulatory framework at the London Stock Exchange impeded defaulting governments from having access to the market. Therefore, the implicit incentive for underwriting banks and governments was to accelerate the negotiations with bondholders, particularly during periods of high liquidity. Frequently, however, the settlements reached were short-lived. In contrast, certain merchant banks opted to delay or refuse a settlement if they judged that the risks of a renewed default were too high. In such cases, even if negotiations were extended, the final agreements were more often respected, allowing governments to improve their repayment record.