Market Access and High Spread Issuances
IMF Working Papers, January 16, 2026
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Bibliographic details
- Authors: Raphael A Espinoza, Metodij Hadzi-Vaskov, Luis Carlos Ibanez-Thomae, Flora Lutz
- Published: January 16, 2026
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798229037259.001
Summary
- Study investigates factors determining emerging markets’ likelihood to access international capital markets.
- Approach:
- Develop a simple theoretical model outlining market access foundations: role of risk, spreads, net worth, and cost of repaying debt.
- Estimate a random forest model to assess key predictors of market access.
- Collect a novel dataset and examine characteristics of high spread issuances.
- Key conceptual finding: trade-off between risk insurance and moral hazard; relevance of unconventional instruments such as guarantees and macro-contingent debt.
Theoretical model: mechanisms and implications
- Highlights the role of:
- risk,
- spreads,
- net worth,
- cost of repaying debt.
- Demonstrates a trade-off between:
- risk insurance, and
- moral hazard.
- Underscores the relevance of unconventional instruments:
- guarantees,
- macro-contingent debt.
Empirical approach and key predictors
- Methodology:
- Random forest model used to assess predictors of market access.
- Key predictors identified:
- outstanding obligations,
- reserves,
- short-term external debt,
- EMBIG spreads,
- size of the economy.
Non-linear effects and interactions
- Important non-linear effects documented:
- An inverted U-curve for the effect of spreads on likelihood of issuance.
- A positive relationship between likelihood of issuance and external debt at low spreads that turns negative at high spreads.
- High sensitivity to governance only for high spreads.
Characteristics of high-spread issuances
- High spread issuances are often unconventional and include:
- guarantees,
- contingencies,
- collateral.
- These empirical characteristics align with theoretical predictions.
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