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

Feyen, Erik ; Ghosh, Swati ; Kibuuka, Katie ; Farazi, Subika

World Bank, Washington, DC

关键词: RISK PROFILES;    CREDIT MARKETS;    MONETARY POLICY;    HOLDING;    BORROWER;   

DOI  :  10.1596/1813-9450-7363
RP-ID  :  WPS7363

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

Using the universe of all externallyissued bonds by corporates and sovereigns in emerging anddeveloping economies during 2000-14, this paper analyzesvarious issuance trends, including the unprecedentedpost-crisis surge. The paper focuses on external issuance atthe country-industry and individual bond levels and findsthat global factors matter greatly for emerging anddeveloping economies issuance. A decrease in U.S. expectedequity market (or interest rate) volatility, U.S. corporatecredit spreads, and U.S. interbank funding costs and anincrease in the Federal Reserve’s balance sheet (i) raisethe odds that the monthly issuance volume of acountry-industry is above its historical average; (ii)decrease individual bond yields and spreads; and (iii) raisebond maturities, after controlling for country pull factors,bond characteristics (for example, type of issuer, industry,and riskiness). Additionally, we document support that therisk-taking channel of exchange rate appreciation alsooperates for external bond issuance. Moreover, while thepaper finds that country pull factors affect the impact ofglobal factors, it does not find consistent evidence forthis across the board. This result suggests that, duringloose global funding conditions, flows are mostly driven bypush factors and do not systematically discriminate betweenemerging and developing economies. Taken together, thefindings suggest that although issuers might be able tobenefit from benign international funding conditions, thelarge issuance volumes, currency risks, and high exposure toglobal factors could pose external and domestic challengesfor policy makers, particularly when global cycles reverse.