America’s 1840s state debt crisis presents a unique opportunity to identify whether institutional constraints lower borrowing costs. After nine states defaulted, sixteen states adopted constitutional provisions promoting credibility. Only states that defaulted during the crisis were rewarded with lower borrowing costs and increased access to credit following reform. This cannot be explained by underlying trends or differences in the content of the reforms. Non-defaulting states, which had established commitment by avoiding default, were not rewarded because reform did not convey new information. These results indicate that sovereigns with tarnished reputations can benefit from adopting constitutional constraints to convey commitment.