IMF Working Papers

On the Determinants of First-Time Sovereign Bond Issues

Author/Editor:

David A. Grigorian

Publication Date:

September 1, 2003

Electronic Access:

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Summary:

In recent years, the number of countries which have borrowed in international capital markets by issuing sovereign bonds has increased substantially. For these countries, capital market access meant a de facto acknowledgement of their policy successes and improvements in their creditworthiness that enabled them to graduate from the group of official financing recipients into a more advanced group of emerging market economies. The paper looks at the determinants of sovereign bond issuances and derives the relationship between internal and external factors and market access using a simple macro model. The market access condition is then translated into a simple rule that requires an excess demand for the sovereign bonds in question. Regression results based on this model offer some insights into peculiarities of first-time sovereign bond issues that could be used in policy deliberations.

Series:

Working Paper No. 2003/184

Subject:

Bonds Emerging and frontier financial markets Financial institutions Financial markets International capital markets Securities markets Sovereign bonds