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Emerging Local Currency Bond Markets
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Author :International Monetary Fund Publisher :International Monetary Fund ISBN 13 :1513573926 Total Pages :157 pages Book Rating :4.5/5 (135 download)
Book Synopsis Guidance Note For Developing Government Local Currency Bond Markets by : International Monetary Fund
Download or read book Guidance Note For Developing Government Local Currency Bond Markets written by International Monetary Fund and published by International Monetary Fund. This book was released on 2021-03-12 with total page 157 pages. Available in PDF, EPUB and Kindle. Book excerpt: This guidance note was prepared by International Monetary Fund (IMF) and World Bank Group staff under a project undertaken with the support of grants from the Financial Sector Reform and Strengthening Initiative, (FIRST).The aim of the project was to deliver a report that provides emerging market and developing economies with guidance and a roadmap in developing their local currency bond markets (LCBMs). This note will also inform technical assistance missions in advising authorities on the formulation of policies to deepen LCBMs.
Book Synopsis Foreign Participation in Emerging Markets’ Local Currency Bond Markets by : Mr.Shanaka J. Peiris
Download or read book Foreign Participation in Emerging Markets’ Local Currency Bond Markets written by Mr.Shanaka J. Peiris and published by International Monetary Fund. This book was released on 2010-04-01 with total page 21 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper estimates the impact of foreign participation in determining long-term local currency government bond yields and volatility in a group of emerging markets from 2000-2009. The results of a panel data analysis of 10 emerging markets show that greater foreign participation in the domestic government bond market tends to significantly reduce long-term government yields. Moreover, greater foreign participation does not necessarily result in increased volatility in bond yields in emerging markets and, in fact, could even dampen volatility in some instances.
Book Synopsis Emerging Market Local Currency Bond Yields and Foreign Holdings in the Post-Lehman Period - a Fortune or Misfortune? by : Mr.Christian Ebeke
Download or read book Emerging Market Local Currency Bond Yields and Foreign Holdings in the Post-Lehman Period - a Fortune or Misfortune? written by Mr.Christian Ebeke and published by International Monetary Fund. This book was released on 2014-02-12 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper shows that foreign holdings of local currency government bonds in emerging market countries (EMs) have reduced bond yields but have somewhat increased yield volatility in the post-Lehman period. Econometric analyses conducted from a sample of 12 EMs demonstrate that these results are robust and causal. We use an identification strategy exploiting the geography-based measure of EMs financial remoteness vis-à-vis major offshore financial centers as an instrumental variable for the foreign holdings variable.The results also show that, in countries with weak fiscal and external positions, foreign holdings are greatly associated with increased yield volatility. A case study using Poland data elaborates on the cross country findings.
Book Synopsis Drivers of Emerging Market Bond Flows and Prices by : Mr. Evan Papageorgiou
Download or read book Drivers of Emerging Market Bond Flows and Prices written by Mr. Evan Papageorgiou and published by International Monetary Fund. This book was released on 2021-12-16 with total page 14 pages. Available in PDF, EPUB and Kindle. Book excerpt: An interesting disconnect has taken shape between local currency- and hard currency-denominated bonds in emerging markets with respect to their portfolio flows and prices since the start of the recovery from the COVID-19 pandemic. Emerging market assets have recovered sharply from the COVID-19 sell-off in 2020, but the post-pandemic recovery in 2021 has been highly uneven. This note seeks to answer why. Yields of local currency-denominated bonds have risen faster and are approaching their pandemic highs, while hard currency bond yields are still near their post-pandemic lows. Portfolio flows to local currency debt have similarly lagged flows to hard currency bonds. This disconnect is closely linked to the external environment and fiscal and inflationary pressures. Its evolution remains a key consideration for policymakers and investors, since local markets are the main source of funding for emerging markets. This note draws from the methodology developed in earlier Global Financial Stability Reports on fundamentals-based asset valuation models for funding costs and forecasting models for capital flows (using the at-risk framework). The results are consistent across models, indicating that local currency assets are significantly more sensitive to domestic fundamentals while hard currency assets are dependent on the external risk sentiment to a greater extent. This suggests that the post-pandemic, stressed domestic fundamentals have weighed on local currency bonds, partially offsetting the boost from supportive global risk sentiment. The analysis also highlights the risks emerging markets face from an asynchronous recovery and weak domestic fundamentals.
Book Synopsis Multi-Sector Bond Funds in Emerging Markets—Easy Come, Easy Go by : Fabio Cortes
Download or read book Multi-Sector Bond Funds in Emerging Markets—Easy Come, Easy Go written by Fabio Cortes and published by International Monetary Fund. This book was released on 2021-12-16 with total page 12 pages. Available in PDF, EPUB and Kindle. Book excerpt: Unconstrained multi-sector bond funds (MSBFs) can be a source of spillovers to emerging markets and potentially exert a sizable impact on cross-border flows. MSBFs have grown their investment in emerging markets in recent years and are highly concentrated—both in their positions and their decision-making. They typically also exhibit opportunistic behavior much more so than other investment funds. Theoretically, their size, multisector mandate, and unconstrained nature allows MSBFs to be a source of financial stability in periods of wide-spread market turmoil while others sell at fire-sale prices. However, this note, building on the analysis of Cortes and Sanfilippo (2020) and incorporating data around the COVID-19 crisis, finds that MSBFs could have contributed to increase market stress in selected emerging markets. When faced with large investor redemptions during the crisis, our sample of MSBFs chose to rebalance their portfolios in a concentrated manner, raising a large proportion of cash in a few specific local currency bond markets. This may have contributed to exacerbating the relative underperformance of these local currency bond markets to broader emerging market indices.
Book Synopsis Emerging Local Currency Bond Markets by : John D. Burger
Download or read book Emerging Local Currency Bond Markets written by John D. Burger and published by . This book was released on 2010 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We assess the development of local currency bond markets in emerging market economies (EMEs). Supported by policies and laws that helped to improve macroeconomic stability and creditor rights, many local currency EME bond markets have grown substantially over the past decade and have also provided USD-based investors with attractive returns. U.S. investors have responded by increasing their holdings of EME local currency bonds from less than $2 billion in 2001 to over $27 billion by end-2008. While the increase in U.S. investment spanned many EMEs, empirical tests suggest that relatively more went to those with identifiable investor-friendly institutions and policies.
Book Synopsis Emerging Market Local Currency Bond Market, Too Risky to Invest? by : Uğur N. Küçük
Download or read book Emerging Market Local Currency Bond Market, Too Risky to Invest? written by Uğur N. Küçük and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Over the last decade, local currency emerging market (EM) debt has been developing to become an attractive and complementary investment category as many EM countries have been successful to reduce currency mismatches and maturity problems by implementing sound fiscal and monetary policies. Analyzing the period from 2002 to July 2009, we show that the local currency EM debt investments provide significant additional alpha and diversification to traditional bond portfolios. In particular, first, EM local currency bond returns are less correlated to the US stock market, treasury and high-yield bond markets, and global risk premia compared to the a case of EM equity and US dollar-denominated bond markets. Second, yields and excess returns on local currency debt depend largely on expected depreciation of the exchange rate against US dollar, while excess returns on dollar-denominated EM debt are for the most part compensation for bearing the global risk. Third, EM sovereign local currency bond returns beat other emerging and mature market asset classes by providing higher risk adjusted excess returns and diversification. In light of our findings, we suggest that the development of local currency bond markets in EM countries could contribute to global financial stability by reducing currency mismatches and reliance on foreign currency debt, which in turn is linked to growth and poverty reduction.
Book Synopsis Good Practices for Developing a Local Currency Bond Market by : Asian Development Bank
Download or read book Good Practices for Developing a Local Currency Bond Market written by Asian Development Bank and published by Asian Development Bank. This book was released on 2019-05-01 with total page 350 pages. Available in PDF, EPUB and Kindle. Book excerpt: Local currency bond markets in ASEAN+3 play an important role in diversifying financial intermediary channels and mitigating the impacts of financial crises. They also have the potential to help mobilize developing Asia's significant savings to meet the region's enormous infrastructure investment needs. Drawing extensively on knowledge generated by the ASEAN+3 Bond Market Forum, the publication looks at the essential building blocks and the enabling environment for these markets, as well as the roles of government, relevant authorities, and market participants.
Book Synopsis Nonresident Capital Flows and Volatility: Evidence from Malaysia’s Local Currency Bond Market by : Mr.David A. Grigorian
Download or read book Nonresident Capital Flows and Volatility: Evidence from Malaysia’s Local Currency Bond Market written by Mr.David A. Grigorian and published by International Monetary Fund. This book was released on 2019-01-25 with total page 19 pages. Available in PDF, EPUB and Kindle. Book excerpt: Malaysia’s local currency debt market is one of the most liquid public debt markets in the world. In recent years, the growing share of nonresident holders of debt has been a source of concern for policymakers as a reason behind exchange rate volatility. The paper provides an overview of the recent developments in the conventional debt market. It builds an empirical two-stage model to estimate the main drivers of debt capital flows to Malaysia. Finally, it uses a GARCH model to test the hypothesis that nonresident flows are behind the observed exchange rate volatility. The results suggest that the public debt market in Malaysia responds adequately to both pull and push factors and find no firm evidence that nonresident flows cause volatility in the onshore foreign exchange market.
Book Synopsis Developing a local currency government Bond market in an emerging economy after COVID-19 by : Asian Development Bank
Download or read book Developing a local currency government Bond market in an emerging economy after COVID-19 written by Asian Development Bank and published by Asian Development Bank. This book was released on 2022-12-01 with total page 63 pages. Available in PDF, EPUB and Kindle. Book excerpt: This publication explores how a local currency government bond market is vital to strengthen economic recovery from COVID-19. It focuses on the Lao People’s Democratic Republic, as its market is exposed to many challenges also faced by other developing countries. It examines how this nation can benefit from the experiences of its neighbors in the Asian Bond Markets Initiative: the Association of Southeast Asian Nations, plus the People’s Republic of China, Japan, and the Republic of Korea (ASEAN+3). The publication highlights the essential building blocks for developing an efficient government bond market with sound cash and debt management.
Book Synopsis Foreign Participation in Local-currency Bond Markets by : John D. Burger
Download or read book Foreign Participation in Local-currency Bond Markets written by John D. Burger and published by . This book was released on 2004 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis On International Integration of Emerging Sovereign Bond Markets by : Mr.Itai Agur
Download or read book On International Integration of Emerging Sovereign Bond Markets written by Mr.Itai Agur and published by International Monetary Fund. This book was released on 2018-01-25 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper investigates the international integration of EM sovereign dollar-denominated and local-currency bond markets. Factor analysis is used to examine movements in sovereign bond yields and common sources of yield variation. The results suggest that EM dollar-denominated sovereign debt markets are highly integrated; a single common factor that is highly correlated with US and EU interest rates explains, on average, about 80 percent of the total variability in yields. EM sovereign local currency bond markets are not as internationally integrated, and three common factors explain about 74 percent of the total variability. But a factor highly correlated with US and EU interest rates still explains 63 percent of the yield variation accounted for by common factors. That said, there is some diversity among EM countries in the importance of common factors in affecting sovereign debt yields.
Book Synopsis Global Financial Spillovers to Emerging Market Sovereign Bond Markets by : Mr.Christian Ebeke
Download or read book Global Financial Spillovers to Emerging Market Sovereign Bond Markets written by Mr.Christian Ebeke and published by International Monetary Fund. This book was released on 2015-06-26 with total page 22 pages. Available in PDF, EPUB and Kindle. Book excerpt: Foreign holdings of emerging markets (EMs) government bonds have increased substantially over the last decade. While foreign participation in local-currency sovereign bond markets provides an additional source of financing and reduces sovereign yields, it raises concerns about increased sensitivity of yields to shifts in market sentiment. The analysis in this paper suggests that foreign participation and an undiversified investor base transmit global financial shocks to local-currency sovereign bond markets by increasing yield volatility and, beyond a certain threshold, amplify these spillovers. These estimates are robust to a range of econometric techniques including panel smooth threshold regression.
Book Synopsis Emerging Market Local Currency Bonds by : Ken Miyajima
Download or read book Emerging Market Local Currency Bonds written by Ken Miyajima and published by . This book was released on 2012 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: " Over the past three years, cross-border inflows into emerging market (EM) local currency bonds have surged. The returns on these bonds have moved more closely with those on international assets regarded as "safe", particularly following the euro area debt crisis. This paper first demonstrates that domestic factors have tended to dictate the dynamics of the EM local currency government yield. The importance of local drivers has probably increased the potential diversification benefit, creating strong appetite for the asset class. Second, the paper confirms that EM local currency government yields have behaved more like safe haven yields since 2008: they have dropped, rather than increased, in response to worsening global risk sentiment. Yet EM local currency government yields could be susceptible to adverse external shocks: the yield dynamics have been affected by unsustainably low US Treasury yields. Moreover, the international role of EM local currency bonds depends crucially on the behaviour of exchange rates. Nevertheless, the further development of local currency bond markets should help strengthen the stability of the international monetary and financial system." - - Abstract.
Book Synopsis The Future of China's Bond Market by : Mr. Alfred Schipke
Download or read book The Future of China's Bond Market written by Mr. Alfred Schipke and published by International Monetary Fund. This book was released on 2019-03-13 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: China’s bond market is destined to play an increasingly important role, both at home and abroad. And the inclusion of the country’s bonds in global indexes will be a milestone for its financial market integration, bringing big opportunities as well as challenges for policymakers and investors alike. This calls for a good understanding of China’s bond market structure, its unique characteristics, and areas where reforms are needed. This volume comprehensively analyzes the different segments of China’s bond market, from sovereign, policy bank, and credit bonds, to the rapidly growing local government bond market. It also covers bond futures, green bonds, and asset-backed securities, as well as China’s offshore market, which has played a major role in onshore market development.
Book Synopsis Building Local Bond Markets by : Alison Harwood
Download or read book Building Local Bond Markets written by Alison Harwood and published by World Bank Publications. This book was released on 2000-01-01 with total page 538 pages. Available in PDF, EPUB and Kindle. Book excerpt: Since the Asia and Tequila crises of the late 1990s, a growing number of emerging market countries have focused on developing local bond markets to lock in local currency, fixed-rate and long-term funding, and help governments and corporations better manage their financing risks. International organizations from Washington to Southeast Asia are pushing bond market development, to reduce global instability by improving domestic risk management. This book is part of the International Finance Corporation's efforts to assist countries in South Asia and other parts of the world to identify their need for local bond markets, the impediments to developing them, and how those impediments might be removed. The book is based on papers presented at the South Asian Debt Market Symposium held in Sri Lanka in October 1999. It provides valuable insights to emerging market nations wrestling with the issue of building local bond markets. This book will be of interest to bond market specialists, policymakers, and the private sector.
Book Synopsis The Development of Local Debt Markets in Asia by : Mr.Mangal Goswami
Download or read book The Development of Local Debt Markets in Asia written by Mr.Mangal Goswami and published by International Monetary Fund. This book was released on 2011-06-01 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper makes an assessment of the progress made in developing local debt markets in emerging Asia. Market development has been limited by hurdles confronting borrowers and lenders, current and potential liquidity providers, and insufficient support from government policies and regulations. Besides fostering a credit culture to deepen local debt markets, the issue of critical size can be addressed through an integrated regional market for local currency bonds that provides greater scale, efficiency, and access. With rapid economic growth in Asia, a key challenge is to generate financial assets that can provide the underlying collateral for expanding fixed-income markets, and hence domestic and regional investment opportunities.
