On the Determinants of First-Time Sovereign Bond Issues

IMF Working Papers, September 1, 2003

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On the Determinants of First-Time Sovereign Bond Issues

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Bibliographic details

• Authors: David A. Grigorian
• Published: September 1, 2003
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781451859386.001

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 derives the relationship between internal and external factors and market access using a simple macro model.
• The market access condition is translated into a simple rule that requires an excess demand for the sovereign bonds in question.
• Regression results based on this model offer insights into peculiarities of first-time sovereign bond issues that could be used in policy deliberations.

Major findings and analytical approach

• Analytical framework:
  • Uses a simple macro model to link internal and external determinants to market access.
  • Translates market access condition into a practical rule: excess demand for the sovereign bonds is required for market access.
• Empirical approach:
  • Regression analysis based on the model is used to investigate determinants of first-time sovereign bond issues.
• Key qualitative finding:
  • First-time sovereign bond issuance is associated with demonstrated policy success and improved creditworthiness, facilitating graduation from official financing recipient status to emerging market status.

Policy implications and uses

• The simple rule (excess demand requirement) provides a potentially actionable criterion for policymakers considering first-time sovereign bond issuance.
• Regression-based insights highlight peculiarities of first-time issues that can inform policy deliberations on timing and conditions for entering international capital markets.

Publication and metadata

• ByDavid A. Grigorian
• September 1, 2003
• IMF Working Papers
• Pages: 24
• Volume: 2003
• Issue: 184
• Series: Working Paper No. 2003/184
• DOI: https://doi.org/10.5089/9781451859386.001
• Stock No: WPIEA1842003
• ISBN: 9781451859386
• ISSN: 1018-5941
• Subject: Bonds, Emerging and frontier financial markets, Financial institutions, Financial markets, International capital markets, Securities markets, Sovereign bonds
• Keywords: Bonds, capital markets, Dita sovereign bond, Eastern Europe, Emerging and frontier financial markets, emerging market, emerging market bond issuance, first-time market access, Global, International capital markets, Securities markets, sovereign bond, sovereign bond bond issue, sovereign bond issuance, sovereign bond issuer, sovereign bonds, WP

Source: On the Determinants of First-Time Sovereign Bond Issues, IMF Working Paper No. 2003/184.

Content in this bundle

• On The Determinants of First-Time Sovereign Bond Issues - WP/03/184
  • On The Determinants of First-Time Sovereign Bond Issues - WP/03/184 (Markdown version)
  • On The Determinants of First-Time Sovereign Bond Issues - WP/03/184 (PDF)