News Brief No. 01/19

News Brief: IMF Publishes Quarterly Emerging Market Financing Report

February 14, 2001

The International Monetary Fund (IMF) today published on its website its latest Emerging Market Financing: Quarterly Report on Developments and Prospects, which covers the fourth quarter of 2000.

The Emerging Market Financing report is an element of the IMF's surveillance over international capital markets. The report draws, in part, on a series of regular informal discussions with a broad set of private financial market participants. The purpose of the quarterly report is to provide an analysis of developments in emerging bond, equity and syndicated loan markets, and the IMF Staff's appraisal of key developments, the outlook, and risks for emerging market fundraising on international capital markets. The reports are published approximately four weeks after the end of each quarter.

Heightened expectations of a slowdown of the U.S. economy, lowered earnings potential of the technology, media and telecom sector, and a deterioration in U.S. credit markets, all took their toll on emerging bond and equity markets in the last quarter of 2000. As emerging market spreads widened sharply, tighter external liquidity conditions focused investor attention intensely on prospects for the two largest emerging market borrowers on international bond markets—Argentina and Turkey. Despite an almost complete drying up of bond issuance, total emerging markets fundraising on international capital markets held up relatively well, supported by a robust syndicated loan market and a surge in equity placements from China. For the year as a whole, fundraising reached its second highest level, behind only the peak boom year of 1997.

The outlook for emerging market assets and financing remains closely tied to developments in the external environment. Changing expectations of the relative probabilities of a "soft" versus "hard" landing scenarios for the U.S. are likely to keep markets volatile. The baseline outlook for 2001 is for a moderation in bond financing, selective equity placements, and a supportive loan market.