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The Growing Role of the Euro in Emerging Market Finance

Masson, Paul R.
Fonte: World Bank, Washington, DC Publicador: World Bank, Washington, DC
Relevância na Pesquisa
46.51%
More than eight years after the introduction of the euro, impacts on developing countries have been relatively modest. Overall, the euro has become much more important in debt issuance than in official foreign exchange reserve holdings. The former has benefited from the creation of a large set of investors for which the euro is the home currency, while demand for euro reserves has been held back by the dominance of the dollar as a vehicle and intervention currency, and the greater liquidity of the market for US treasury securities. Fears of further dollar decline may fuel some shifts out of dollars into euros, however, with the potential for a period of financial instability.

How Firms Use Domestic and International Corporate Bond Markets

Gozzi, Juan Carlos; Levine, Ross; Martinez Peria, Maria Soledad; Schmukler, Sergio L.
Fonte: World Bank, Washington, DC Publicador: World Bank, Washington, DC
EN_US
Relevância na Pesquisa
46.55%
This paper provides the first comprehensive documentation of how firms use domestic and international corporate bond markets. Debt issues in domestic and international markets have different characteristics, not explained by differences across firms or countries. International issues tend to be larger, of shorter maturity, denominated in foreign currency, include more fixed rate contracts, and entail lower yields. These patterns remain when analyzing issues by firms from countries with more developed domestic markets and higher financial integration, and even when comparing issues conducted by the same firm in different markets. These findings are consistent with the views that (1) frictions limit the ability of investors and firms to enter into certain contracts in certain markets, (2) domestic and international markets provide distinct financial services and firms use them as complements, and (3) firms with access to domestic and international markets enjoy advantages relative to those that rely solely on domestic markets.

Turkey - Corporate Bond Market Development : Priorities and Challenges

World Bank
Fonte: Washington, DC Publicador: Washington, DC
EN_US
Relevância na Pesquisa
66.57%
The study is in response to a request by the Capital Markets Board of Turkey to assist them in developing the corporate bond market in line with best practices globally. The objective of this study is to carry out an assessment of the status of the corporate bond market in Turkey. The study identifies key impediments and solutions to sustainable development, and it presents a roadmap to address the key impediments to the development of a dynamic and robust corporate bond market. This study provides a comprehensive review of the Turkish corporate bond market: chapter two provides an overview of the Turkish economy and financial sector; chapter three discusses key impediments to the vibrant development of the corporate bond; chapter four looks at the Turkish bond market within global bond markets and gives a review of the Turkish government bond market; chapter five discusses issues relating to the investor base, factors constraining the growth of a broad and diversified investor base are highlighted; chapter six provides an overview of derivatives market in Turkey and discusses its important role in enhancing liquidity in the secondary markets for government and corporate bonds. The study concludes with a recommended roadmap to develop the corporate bond market in chapter seven. The annexes cover the latest corporate bond offerings in Turkey and examine the expected transaction costs. Survey details of the survey are also in the annex...

Foreign Investment in Local Currency Bonds : Considerations for Emerging Market Public Debt Managers

Sienaert, Alex
Fonte: World Bank, Washington, DC Publicador: World Bank, Washington, DC
EN_US
Relevância na Pesquisa
46.56%
Foreign investors are increasingly important participants in the local currency sovereign bond markets of developing countries. This note provides context on the overall growth of local currency sovereign debt markets in emerging markets and the growth of foreign investor participation in these markets, a short review of the relevant academic literature, and a summary of the sources of foreign demand. The note concludes with a discussion of the implications of growing foreign investor participation for the managers of public domestic debt in developing countries. The aim of the note is to provide a useful, practically-oriented primer for debt managers beginning to engage on this issue, and in particular to facilitate moving the dialogue beyond overly simple categorizations of countries as "emerging markets" and of investors as a homogeneous source of "hot money".

Malaysia : Bond Market Development

International Monetary Fund; World Bank
Fonte: World Bank, Washington, DC Publicador: World Bank, Washington, DC
EN_US
Relevância na Pesquisa
66.57%
This paper pertains to the bond market development in Malaysia, and provides an overview of the market scenario in the country. Malaysia has been successful in developing the capital markets, particularly bond markets, in the recent past. Now, it faces the challenge of how to improve broader access and efficiency of the bond market. A high degree of investor concentration, dominated by government pension funds, plays a significant role in impeding the growth of higher-yield bond market. The role of the government in stimulating the growth of the bond markets should be now shifted toward encouraging more diversity. In order to promote risk diversity, significant measures should be taken to increase competition on the demand side. Another important challenge for the bond markets going forward is improving transparency to make them more attractive to a broader constituency. To improve liquidity and transparency, the authorities should encourage the establishment of open, independent electronic platforms that integrate price search...

Financial Sector Assessment Program - Lebanon : Capital Market Development Technical Note

World Bank
Fonte: Washington, DC Publicador: Washington, DC
EN_US
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46.52%
Lebanese capital market is relatively small as the financial market is dominated by the banking sector. It is apparent that banks dominate financial intermediation in Lebanon to the extent it may inhibit the development of capital markets. Government sees the need to develop capital markets to help finance corporate growth and infrastructure development. It is incumbent on the Government to establish a comprehensive capital market development program, which includes efforts to increase supply and demand, strengthen supervision and enforcement, and must be accompanied by an effective outreach campaign, both domestically and internationally. On the demand side, creating a steady flow of investment into instruments with a long-term horizon, primarily from the pension and insurance sectors, will help grow the markets. Increased demand from institutional investors and issuance by large companies will attract more companies to the capital markets. All these efforts need to be complemented by the issuance of effective regulations...

Global Economic Prospects : Financial Market Outlook, July 2013

Aykut, Dilek; Kim, Eung Ju
Fonte: World Bank, Washington, DC Publicador: World Bank, Washington, DC
EN_US
Relevância na Pesquisa
46.54%
Global financial markets were largely stable during the past year, not with-standing the recent uptick in volatility amid uncertainty over the timing of an eventual tapering off of quantitative easing. Improved financial conditions are reflected in a strong rebound in gross capital flows (international bond issuance, cross-border syndicated bank loans and new equity placements) to developing countries, which were 63 percent higher in the first five months of 2013 than during the same period in 2012. Foreign direct investment (FDI) inflows to developing countries increased by 9 percent during the first quarter of 2013 on a year-on-year basis, with a mixed picture across countries. Since late May, financial market volatility has increased, with increased expectations about possible tapering of U.S. quantitative easing in coming months and uncertainty over its impacts. Although there have been some large stock market corrections in some Asian countries, so far the overall impact has been moderate. Bond yields on developing country debt are also on the rise as base rates and spreads increase.

Hybrid Issuance Regimes for Corporate Bonds in Emerging Market Countries

Loladze, Tamar
Fonte: World Bank, Washington, DC Publicador: World Bank, Washington, DC
Tipo: Trabalho em Andamento
EN_US
Relevância na Pesquisa
56.57%
Securities regulators in many developing countries are looking for ways to help grow their nongovernment bond markets to finance development. A common challenge is onerous regulations for issuance of bonds, which tend to discourage companies from coming to market. This paper explains and analyzes an issuance framework—a hybrid offer regime (HBOR)—that is particularly suitable for bonds and could help encourage greater issuance and market growth. The HBOR reduces issuance requirements and approval times for bond issuers but maintains certain protections to ensure investor comfort. While certain aspects of this type of issuance have been covered in literature on private placements, the review of hybrid offer regimes, as discussed in this paper, is new and has been evaluated by the WBG. Drawing on the experience of eight countries, the paper identifies key features of HBORs and highlights important issues for policymakers to consider in their implementation. The findings conclude that the most salient features of HBORs are: i) investment limited to qualified investors...

Global Liquidity and External Bond Issuance in Emerging Markets and Developing Economies

Feyen, Erik; Ghosh, Swati; Kibuuka, Katie; Farazi, Subika
Fonte: World Bank, Washington, DC Publicador: World Bank, Washington, DC
Tipo: Trabalho em Andamento
EN_US
Relevância na Pesquisa
46.54%
Using the universe of all externally issued bonds by corporates and sovereigns in emerging and developing economies during 2000-14, this paper analyzes various issuance trends, including the unprecedented post-crisis surge. The paper focuses on external issuance at the country-industry and individual bond levels and finds that global factors matter greatly for emerging and developing economies issuance. A decrease in U.S. expected equity market (or interest rate) volatility, U.S. corporate credit spreads, and U.S. interbank funding costs and an increase in the Federal Reserve’s balance sheet (i) raise the odds that the monthly issuance volume of a country-industry is above its historical average; (ii) decrease individual bond yields and spreads; and (iii) raise bond maturities, after controlling for country pull factors, bond characteristics (for example, type of issuer, industry, and riskiness). Additionally, we document support that the risk-taking channel of exchange rate appreciation also operates for external bond issuance. Moreover...

A regional bond market for East Asia? The evolving political dynamics of regional financial cooperation

Amyx, Jennifer A
Fonte: Universidade Nacional da Austrália Publicador: Universidade Nacional da Austrália
Tipo: Working/Technical Paper Formato: 210893 bytes; 352 bytes; application/pdf; application/octet-stream
EN_AU
Relevância na Pesquisa
66.16%
This paper examines the evolving political dynamics of regional financial cooperation in East Asia since the 1997–98 Asian financial crisis, examining in particular the factors contributing to the growing momentum behind the recent Asian bond market initiative being pursued by the Association for Southeast Asian (ASEAN) nations plus Japan, China and South Korea (referred to collectively as ‘ASEAN+3’). The paper argues that this initiative is making rapid progress because it resonates positively with the domestic political agendas of many leaders in the region, is an initiative that numerous countries can claim at least partial ‘ownership’ of, and elicits considerable support from actors outside the region.; no

What are Green Bonds?

World Bank
Fonte: Washington, DC Publicador: Washington, DC
Tipo: Working Paper; Publications & Research; Publications & Research :: Working Paper
ENGLISH; EN_US
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46.51%
The explosive growth of green bonds in the capital markets is increasingly attracting attention from investors. This surge in interest has created a demand for accessible information on the green bond market. This primer was created in response to this demand and covers the principles of this relatively new financial instrument. The following intends to serve as a guide for those interested in better understanding the nature of green bonds. The content will aim to distinguish green bonds from other traditional financial instruments. It will also provide insight into the potential of green bonds to mobilize new sources of climate finance. This paper includes the following highlights: understanding bonds (chapter one); understanding green bonds (chapter two); and benefits and potential.

Mexico : Capital Market Development

International Monetary Fund; World Bank
Fonte: World Bank, Washington, DC Publicador: World Bank, Washington, DC
Tipo: Economic & Sector Work :: Financial Sector Assessment Program (FSAP); Economic & Sector Work
ENGLISH; EN_US
Relevância na Pesquisa
56.5%
Securities markets in Mexico are orderly and relatively innovative; however, corporate markets lag behind those in comparator countries. The government bond market accounts for the bulk of the fixed-income segment, and is well developed and active. While financial savings rates have been growing, little has been transformed into long-term investments. Most of the savings remain in traditional savings accounts. Institutional investors still hold the bulk of their assets in government bonds. Mexico will need to find solutions to further develop its capital market to fund its development needs. In the infrastructure sector alone, the country needs approximately US$230 billion of new investments. In the corporate sector, provision of financing by banks fare well below peers, especially for small and medium enterprises. Meanwhile, the pension fund industry, growing at about US$20-US$30 billion annually, requires sound investment outlets. The large concentration in the control of financial intermediaries raises complex issues and may stunt market development. The investor base in the equity market lacks diversity...

Low-Income Countries’ Access to Private Debt Markets

Hostland, Doug
Fonte: Banco Mundial Publicador: Banco Mundial
Tipo: Publications & Research :: Policy Research Working Paper
ENGLISH
Relevância na Pesquisa
46.52%
Private debt flows to developing countries surged to record levels over the period 2003-07. A few low-income countries have gained access to the international bond market but the bulk of the flows have continued to go to just a few large middle-income countries. Most low-income countries still heavily depend on concessional loans and grants from the official sector to meet their financing needs. The paper provides an overview of low-income countries' access to cross-border bank lending and bond issuance in the international market over the past few decades. It highlights some stylized facts that characterize salient features of low-income countries' experience in external borrowing from the private sector and discusses the various factors that influence governments' and corporations' decisions to seek external financing along with creditors' decisions to provide the financing. The paper concludes by assessing the prospects for low-income countries' access to private debt markets over the medium term.

Developing India's Corporate Bond Market

World Bank
Fonte: Washington, DC Publicador: Washington, DC
Tipo: Economic & Sector Work :: Policy Note; Economic & Sector Work
ENGLISH; EN_US
Relevância na Pesquisa
66.44%
A well-developed corporate bond market is essential for the efficiency and stability of a country's financial system and the overall growth of its economy. Issuers and investors' access to the market provides for financial diversification and facilitates necessary financing, which benefits not only AAA-rated corporations but also less well known, sub-investment grade corporations and infrastructure developers. This note examines the state of India's corporate bond market, identifies constraints that inhibit its size and depth, and suggests reform measures that India needs to take to develop its market into a competitive source of financing for a wide range of issuers and an attractive investment for a wide range of investors. Recommendations are based not only on an assessment of conditions in India, but also on relevant international experience.

Contract Risks and Credit Spread Determinants in the International Project Bond Market

Dailami, Mansoor; Hauswald, Robert
Fonte: World Bank, Washington, DC Publicador: World Bank, Washington, DC
Tipo: Publications & Research :: Policy Research Working Paper; Publications & Research
ENGLISH; EN_US
Relevância na Pesquisa
56.39%
International bond markets have become an increasingly important source of long-term capital for infrastructure projects in emerging market economies over the past decade. The Ras Laffan Liquified Natural Gas (Ras Gas) project represents a milestone in this respect: its $1.2 billion bond offering, completed in December 1996, has been the largest for any international project. The Ras Gas project has the right to extract, process, and sell liquefied natural gas (LNG) from a field off the shore of Qatar. The principal off-taker is the Korea Gas Corporation (Kogas), which resells most of the LNG to the Korea Electric Power Corporation (Kepco) for electricity generation. In this clinical study the authors analyze the determinants of credit spreads for the Ras Gas project in terms of its contractual structure, with a view to better understanding the role of contract design in facilitating access to the global project bond market. Market risk perceptions have long been recognized to be a function of firm-specific variables...

Domestic Bond Market Development; The Arirang Bond Experience in Korea

Batten, Jonathan A.; Szilagyi, Peter G
Fonte: World Bank Publicador: World Bank
Tipo: Journal Article; Journal Article
Relevância na Pesquisa
66.51%
A two-tiered approach to financial market development aimed at both bank and bond market reform would also be complementary to longer term economic development, provided services could be delivered through efficient financial and legal institutions (Chakraborty and Ray 2006) and there was strong protection for investors and sound fiscal and monetary policy management by government (Burger and Warnock 2006b). Historically, local issuers tend to issue in the major currencies (U.S. dollars, yen, and euro), and then either swap the proceeds into local currency (interest rate parity theory suggests this should deliver funds equivalent in yield to what is available in the domestic market) or, more often, sell the foreign currency proceeds in spot foreign exchange markets, leaving the repayment cash flows unhedged. Chakraborty and Ray (2006) recently established that although stronger bank monitoring helps to resolve information asymmetries and agency concerns, it is the efficiency of financial and legal institutions that influences growth outcomes, whether there is a bank- or a market-based financial system. Among them are the need for enabling regulation, including reform of withholding and other foreign investor taxes (Lejot, Arner, and Liu 2006); continuing reform of corporate governance...

South Asian Bond Markets : Developing Long-Term Finance for Growth

Sophastienphong, Kiatchai; Mu, Yibin; Saporito, Carlotta
Fonte: Washington, DC : World Bank Publicador: Washington, DC : World Bank
Tipo: Publications & Research :: Publication; Publications & Research :: Publication
ENGLISH; EN_US
Relevância na Pesquisa
56.55%
Bond markets play an essential part in economies. As part of a diversified financial system, a well-developed domestic bond market can help provide the long-term financing needed for sustainable growth. It can also produce broad-ranging benefits throughout the economy. In South Asia the development of domestic debt securities markets lags. The markets remain small compared both with the size of the region's economies and with markets in East Asia. Even in India the market is still small relative to Gross Domestic Product (GDP), suggesting that long-term debt financing remains at an early stage in the region. Equity markets and banks still dominate South Asian financial systems. Measures are needed to enhance both the depth and the breadth of South Asian bond markets, to bring them into line with those in East Asia and, in the long run, with those in Organization for Economic Co-operation and Development (OECD) countries. This study assesses domestic debt securities markets in South Asia, identifies constraints to their development...

Is There a Distress Risk Anomaly? Corporate Bond Spread as a Proxy for Default Risk

Anginer, Deniz; Yildizhan, Celim
Fonte: Banco Mundial Publicador: Banco Mundial
Tipo: Publications & Research :: Policy Research Working Paper
ENGLISH
Relevância na Pesquisa
46.52%
Although financial theory suggests a positive relationship between default risk and equity returns, recent empirical papers find anomalously low returns for stocks with high probabilities of default. The authors show that returns to distressed stocks previously documented are really an amalgamation of anomalies associated with three stock characteristics -- leverage, volatility and profitability. In this paper they use a market based measure -- corporate credit spreads -- to proxy for default risk. Unlike previously used measures that proxy for a firm's real-world probability of default, credit spreads proxy for a risk-adjusted (or a risk-neutral) probability of default and thereby explicitly account for the systematic component of distress risk. The authors show that credit spreads predict corporate defaults better than previously used measures, such as, bond ratings, accounting variables and structural model parameters. They do not find default risk to be significantly priced in the cross-section of equity returns. There is also no evidence of firms with high default risk delivering anomalously low returns.

The Emerging Project Bond Market : Covenant Provisions and Credit Spreads

Dailami, Mansoor; Hauswald, Robert
Fonte: World Bank, Washington, DC Publicador: World Bank, Washington, DC
Tipo: Publications & Research :: Policy Research Working Paper; Publications & Research
ENGLISH; EN_US
Relevância na Pesquisa
56.39%
The emergence in the 1990s of a nascent project bond market to fund long-term infrastructure projects in developing countries merits attention. The authors compile detailed information on a sample of 105 bonds issued between January 1993 and March 2002 for financing infrastructure projects in developing countries, document their contractual covenants, and analyze their pricing determinants. They find that on average, project bonds are issued at approximately 300 basis points above U.S. Treasury securities, have a surprisingly high issue size of US$278 million, a maturity of slightly under 12 years, and are rated slightly below investment grade. In terms of geographic origin, projects in Asia and Latin America have issued more bonds than those located in other regions. Much of the recent work relating to the role of contractual covenants to the determination of bond prices has focused on the U.S. corporate bond market with its unique bankruptcy code - Chapter 11 - and well developed legal framework, recognizing the bond contract as the sole instrument of defining the rights and duties of various parties. In circumstances in which the underpinning legal and institutional frameworks governing contract formation and enforcement are not well developed...

Pricing the liquidity spread in the secondary bond market; La fijación del spread de liquidez en el mercado secundario de debentures; O apreçamento do spread de liquidez no mercado secundário de debêntures

Gonçalves, Paulo Eduardo; Sheng, Hsia Hua
Fonte: Universidade de São Paulo. Faculdade de Economia, Administração e Contabilidade Publicador: Universidade de São Paulo. Faculdade de Economia, Administração e Contabilidade
Tipo: info:eu-repo/semantics/article; info:eu-repo/semantics/publishedVersion; Artigo Avaliado pelos Pares Formato: application/pdf
Publicado em 01/03/2010 POR
Relevância na Pesquisa
56.33%
The goal of this work is to analyze and to price the liquidity premium demanded by investors in the trading of corporate bonds in the Brazilian secondary market, based on the bonds' daily yield to maturity. The econometric tests were performed based on a model by Houweling, Mentink and Vorst (2005) applied to the Eurobonds market for the years 1999 to 2001. A five-variable model was implemented to control for other sources of risks, which are determinants of the corporate bonds spread, apart from liquidity. The well-known, two-factor Fama-French (1993) model of fixed income bonds was used to control for credit risk and interest rate risk; the marginal effects were incorporated through individual corporate bond characteristics (rating and duration) and a factor based on the PréxDI rate of the portfolios' duration was included to adapt the model to the peculiarities of the Brazilian bond market. The work took into account four liquidity proxies that are widely used in the literature: issued amount, age of issue, daily number of trades, and bid-ask spread. The model was estimated once for each of the proxies. In order to conduct the regression tests and to price the liquidity premium in the Brazilian secondary bond market, all of the model variables were calculated for each one of the data samples. Then...