Beyond the First Bond: Market Access and Debt Dynamics in Frontier Economies

IMF Working Papers, July 17, 2026

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Beyond the First Bond: Market Access and Debt Dynamics in Frontier Economies

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Bibliographic details

• Authors: Hasan Cetin, Sanan Mirzayev
• Published: July 17, 2026
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9798229055123.001

Methodology and Classification

• Two-step framework combining first Eurobond issuance with the reliance on private external creditors to group Frontier Economies by durability of market access.
• Validation of groups through an unsupervised K-mean clustering.
• Use of a discrete-time event LOGIT model to analyze determinants of market entry.

Determinants of Market Entry

• Global factors:
  • Favorable global liquidity conditions and investor appetite open issuance windows for countries.
• Domestic pull factors (determine ultimate success of market entry):
  • Income
  • Institutions
  • Growth
  • Reserve buffers

Post-entry Debt and Fiscal Dynamics

• Rapid shift by Frontier Economies toward market borrowing after market entry.
• Fiscal stance becomes looser as new financing sources are unlocked.
• Increased exposure to rollover and global financial cycle risks following market entry.

Debt Decomposition and Drivers of Rising Debt

• Debt decomposition exercise shows:
  • A worsening interest–growth differential.
  • Rising debt levels.
• Main drivers identified:
  • Primary deficits.
  • Higher interest burdens.

Policy Implications and Recommendations

• Need for credible medium-term fiscal frameworks.
• Strengthen debt management practices.
• Build reserve buffers to manage the transition to market financing and mitigate rollover and global financial cycle risks.

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