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, while the paper finds that country pull factors affect the impact of global factors, it does not find consistent evidence for this across the board. This result suggests that, during loose global funding conditions, flows are mostly driven by push factors and do not systematically discriminate between emerging and developing economies. Taken together, the findings suggest that although issuers might be able to benefit from benign international funding conditions, the large issuance volumes, currency risks, and high exposure to global factors could pose external and domestic challenges for policy makers, particularly when global cycles reverse.
تفاصيل
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المؤلف
Feyen,Erik H.B., Ghosh,Swati R., Kibuuka,Katie, Farazi,Subika
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تاريخ الوثيقة
2015/07/13
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نوع الوثيقة
ورقة عمل خاصة ببحوث السياسات
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رقم التقرير
WPS7363
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مجلد رقم
1
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عدد المجلدات
1
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البلد
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المنطقة
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تاريخ الإفصاح
2015/07/13
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حالة الافصاح
Disclosed
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اسم الوثيقة
Global liquidity and external bond issuance in emerging markets and developing economies
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كلمة أساسية
bond;global factor;finance and markets;bond issuance;push factor;net exporter of capital;real effective exchange rate;pull factor;exchange rate appreciation;individual bond;global financial crisis;yield to maturity;internationally active bank;global interest rates;panel data set;corporate bond;country fixed effect;real interest rate;international bond market;emerging market bond;international debt security;Capital Inflows;current account balance;local bond market;massive capital inflow;total external debt;private sector credit;federal tax code;government bond market;current account surplus;increase in risk;aggregate capital flows;measure of uncertainty;world growth rate;global financial market;issuance of bond;information on borrower;debt service capacity;current account deficit;local currency exchange;real exchange rate;real estate developer;impact on yield;bilateral exchange rate;nominal exchange rate;financial sector specialist;exchange rate difference;long-term interest rate;currency appreciation;global liquidity;bond issue;indicator variable;investment grade;bond yield;asset price;
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