A License to Issue (Anywhere): Patterns and Drivers of Corporate Bonds in Latin America

By Svetlana Vtyurina, Adrian Robles, Bennett W Sutton

July 11, 2017

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Svetlana Vtyurina, Adrian Robles, and Bennett W Sutton. A License to Issue (Anywhere): Patterns and Drivers of Corporate Bonds in Latin America, (USA: International Monetary Fund, 2017) accessed November 8, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This paper overviews patterns in bond issuance in local and external markets by firms in six large Latin American countries. Data suggest that despite rising issuance, local markets remain small and shallow in several countries. Nevertheless, since greater funding is available to many firms in both markets, we investigate the factors that may explain the firm’s choice on where to issue a bond. Using an unbalanced panel of firm and market-level indicators for years 1995-2015, we control for variables representing several theories of capital structure, and the results show that firm characteristics such as size and liquidity increase the likelihood of firms to issue externally. With respect to market characteristics, the market completeness hypothesis generates the most support, where market scale and depth are most important for the issuer’s choice of the market, suggesting that local markets will have to become deeper to draw more firms and investment.

Subject: Balance of payments, Bonds, Corporate bonds, Expenditure, Financial institutions, Financial markets, Foreign direct investment, Pension spending, Securities markets

Keywords: Bonds, Capital structure, Companies in Brazil, Corporate bond markets, Corporate bonds, Firm, Firm level, Firm Level Data, Firm-level, Firm's choice, Foreign direct investment, Global, Investment grade firm, Investment-grade company, LA-6, Latin America, Latin American firm, Market, Pension spending, Rated firm, Securities markets, WP

Publication Details

Pages:

30
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2017/157
Stock No:

WPIEA2017157
ISBN:

9781484305911
ISSN:

1018-5941

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