Development Finance via DiasporaBonds: Track Record and Potential

Ketkar, Suhas L. ; Ratha, Dilip

World Bank, Washington, D.C.

关键词: ACCOUNTING;    ASSET CLASS;    ASSET-BACKED SECURITIES;    BALANCE OF PAYMENTS;    BALANCE OF PAYMENTS CRISIS;   

DOI  :  10.1596/1813-9450-4311
RP-ID  :  WPS4311

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

A diaspora bond is a debt instrumentissued by a country - or potentially, a sub-sovereign entityor a private corporation - to raise financing from itsoverseas diaspora. Israel and India have raised $35-40billion using these bonds. Drawing on their experiences,this paper discusses the rationale, methodology, and factorsaffecting the issuance of diaspora bonds for raisingexternal development finance. The Government of Israel hasoffered a flexible menu of diaspora bonds since 1951 to keepthe Jewish diaspora engaged. The Indian authorities, incontrast, have used this instrument for balance of paymentssupport, to raise financing during times when they haddifficulty in accessing international capital markets.Diaspora bonds are often sold at a premium to the diasporamembers, thus fetching a "patriotic" discount inborrowing costs. Besides patriotism or the desire to do goodin the investor's country of origin, such a discountcan also be explained by the fact that diaspora investorsmay be more willing and able to take on sovereign risks ofdefault in hard currency as well as devaluation as they mayhave local currency liabilities and they may be able toinfluence the borrower's decision to service such debt.The paper discusses several conditions for successfuldiaspora bond issuance having a sizeable diaspora,especially first-generation migrants, is understandably animportant factor affecting the issuance of diaspora bonds.Countries with strong and transparent legal systems forcontract enforcement are likely to find it easier to issuesuch bonds. Absence of civil strife is a plus. While not apre-requisite, presence of national banks and otherinstitutions in destination countries facilitates themarketing of bonds to the diaspora.