Sovereign bonds in developing countries: Drivers of issuance and spreads

Presbitero, Andrea F.; Ghura, Dhaneshwar; Adedeji, Olumuyiwa; Njie, Lamin

doi:10.1016/j.rdf.2016.05.002

Cited by 58 publications

(53 citation statements)

References 22 publications

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“…Correlation coefficients also testify to the impact of global liquidity on bond spreads (see Table ). There is a significant positive correlation between bond spreads and the VIX index and the expected overnight rate, a result in line with other recent findings (Presbitero et al., ). Rwanda, a non‐FC country, displays the lowest correlation with both, showing that global liquidity affects financing conditions in all countries, but this occurs in FC countries to a much greater extent.…”

Section: Debt Sustainability and Financial Integrationsupporting

confidence: 92%

“…This is in line with the recent study by Presbitero et al. (), which shows that developing countries that have access to international capital markets are typically larger, with higher GDP per capita, and lower initial levels of indebtedness, which broadly corresponds to the profile of our FC group.…”

supporting

confidence: 92%

“…As reported by Olabisi and Stein () and Presbitero et al. (), African countries pay higher interest rates than could be warranted by their fundamentals at all times, reflecting the general ‘distrust’ of African governments as debtors.…”

mentioning

confidence: 83%

See 2 more Smart Citations

Global Liquidity, the Private Sector and Debt Sustainability in Sub‐Saharan Africa

Bonizzi¹,

Laskaridis²,

Toporowski³

2019

Development and Change

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This article analyses the effect of changes in international financial markets on the debt dynamics in sub-Saharan Africa in recent years. A key development is the rise of the private sector as both a lender and a borrower in African debt markets, a process that is associated with the growing integration of the region into global financial markets. The article argues that the Debt Sustainability Framework of the International Monetary Fund and World Bank has taken some steps to account for this growth of private sector, crossborder debt, but such steps still fall short of what is needed. A full appreciation of the importance of private debt implies, first, that debt sustainability in sub-Saharan Africa be understood in the context of countries' integration in global financial markets and the global liquidity cycles that characterize those markets and, second, that the interplay between private and public debt be monitored in order to provide a fuller picture of the impact of private sector debt on fiscal sustainability.The authors wish to thank the anonymous reviewers for their helpful feedback and Andreas Antoniades, Stephanie Blankenburg, Penelope Hawkins and Ewa Karwowski for comments on an earlier version. We also thank UNCTAD for financing earlier research on this subject. All errors are the authors' own.

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Section: Debt Sustainability and Financial Integrationsupporting

confidence: 92%

supporting

confidence: 92%

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Global Liquidity, the Private Sector and Debt Sustainability in Sub‐Saharan Africa

Bonizzi¹,

Laskaridis²,

Toporowski³

2019

Development and Change

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“…Many SSA governments, including in several ex‐HIPCs, now have access to a wider range of lenders and debt instruments (Prizzon & Mustapha, ). In the academic and policy literature, most attention has gone to the large US dollar‐denominated bonds that SSA governments have issued in international markets in recent years (see, e.g., Gevorkyan & Kvangraven, ; Mecagni et al., ; Olabisi & Stein, ; Presbitero, Ghura, Adedeji, & Njie, ; Sy, ; UNCTAD, ). That notwithstanding, it is important to highlight that in SSA marketable public debt is now increasingly issued in local currency to private domestic investors, a trend that follows emerging economies in other regions, be it with a considerable lag (Didier & Schmukler, ).…”

Section: Introductionmentioning

confidence: 99%

Localising sovereign debt: The rise of local currency bond markets in sub‐Saharan Africa

2018

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This paper analyses the development of local currency sovereign bond markets (LCBMs) in sub‐Saharan Africa (SSA), a potentially important source of longer‐term public finance. We make two contributions to the literature. First, we build a novel data set comprising 28 SSA countries for the period 2000–14 to uncover the main correlates of LCBM capitalisation, of local currency bond (LCB) tenors and of LCB issue yields. We find that LCBM capitalisation in SSA relates to politico‐institutional factors, overall financial development and financial system structure. For LCB tenors and issue yields, inflation levels matter too. Second, we complement our econometric analysis with qualitative case studies of Kenya and Nigeria, where we further investigate the drivers of LCBM development and place LCBMs in a broader public debt context. While we document the increasing importance of LCBMs in SSA, we also highlight new vulnerabilities, including those related to investor base composition.

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“…frontier markets, rising debts are also the result of access to international capital markets: since 2010 LIDCs issued more than USD 22 billion in sovereign bonds, in many cases with the aim of using part of the proceeds to finance new infrastructures (Presbitero et al 2016). For instance, in 2014 Ethiopia issued a USD one billion Eurobond to finance imports related to export-oriented projects such as investment in the power transmission infrastructure, sugar factories, and the development of industrial parks (IMF 2015a).…”

Section: Public Investment and Savingmentioning

confidence: 99%

Trends and Challenges in Infrastructure Investment in Low-Income Developing Countries

Gurara

Klyuev²,

Mwase³

et al. 2017

IMF Working Papers

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This paper examines trends in infrastructure investment and its financing in low-income developing countries (LIDCs). Following an acceleration of public investment over the last 15 years, the stock of infrastructure assets increased in LIDCs, even though large gaps remain compared to emerging markets. Infrastructure in LIDCs is largely provided by the public sector; private participation is mostly channeled through Public-Private Partnerships. Grants and concessional loans are an essential source of infrastructure funding in LIDCs, while the complementary role of bank lending is still limited to a few countries. Bridging infrastructure gaps would require a broad set of actions to improve the efficiency of public spending, mobilize domestic resources and support from development partners, and crowd in the private sector.

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Sovereign bonds in developing countries: Drivers of issuance and spreads

Cited by 58 publications

References 22 publications

Global Liquidity, the Private Sector and Debt Sustainability in Sub‐Saharan Africa

Global Liquidity, the Private Sector and Debt Sustainability in Sub‐Saharan Africa

Localising sovereign debt: The rise of local currency bond markets in sub‐Saharan Africa

Trends and Challenges in Infrastructure Investment in Low-Income Developing Countries

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