Not to say that Kings just completely stopping payment to lenders never happened, but this paper argues (at least for the case of Philip II, who defaulted 4 times) that lenders had sufficient leverage to ensure that while kings might miss payments, that kings would eventually continue to pay. And of course, this makes some sense - why would people lend money to someone they had absolutely no leverage over?
The paper argues that lenders (or at least Genoese lenders who provided at least 2/3 of short terms loans) were able to work as a bloc with sufficient power to compel the King to eventually resume payments. As you pointed out, the King is mainly lending money to pay for armies. Being cut-off from credit is the same thing as being cut off from his army.
An interesting point that this paper makes at the end is that in a pre-modern context, lenders would have understood that sometimes... shit happens. They understood what the mechanisms a King would have for generating revenue, and that these revenue streams were not stable (taxation and silver shipments from the New World in Philippe's case), and that a King could in deep default "in good faith" and still be a "good enough" financial situation in subsequent years. That is in fact why the King even needed to borrow money from them to begin with.
The paper argues that lenders (or at least Genoese lenders who provided at least 2/3 of short terms loans) were able to work as a bloc with sufficient power to compel the King to eventually resume payments. As you pointed out, the King is mainly lending money to pay for armies. Being cut-off from credit is the same thing as being cut off from his army.
An interesting point that this paper makes at the end is that in a pre-modern context, lenders would have understood that sometimes... shit happens. They understood what the mechanisms a King would have for generating revenue, and that these revenue streams were not stable (taxation and silver shipments from the New World in Philippe's case), and that a King could in deep default "in good faith" and still be a "good enough" financial situation in subsequent years. That is in fact why the King even needed to borrow money from them to begin with.
https://www.bde.es/f/webpi/SES/seminars/2009/files/sie0927.p...