News Brief

The International Monetary Fund (IMF) today published on its website (http://www.imf.org) its latest Emerging Market Financing: Quarterly Report on Developments and Prospects, which covers the third quarter of 2000.

The Emerging Market Financing report is an element of the IMF's surveillance of developments in international capital markets. The report draws, in part, on a series of regular informal discussions with a broad set of private financial market participants.

The purpose of the quarterly report is to provide an analysis of developments in emerging bond, equity and syndicated loan markets, and the IMF staff's appraisal of key developments and the outlook and risks for emerging market fundraising on international capital markets. The reports will usually be published approximately four weeks after the end of each quarter.

Reflecting expectations of a slowing U.S. economy, higher oil prices, and a fall in the euro to a new low, the performance of emerging bond (up 5%) and equity (down 13%) markets diverged sharply during the third quarter. Though emerging market's fundraising on international capital markets continued to moderate in the third quarter, it held up relatively well as increased bond issuance, especially from smaller sovereigns and the corporate sector, offset declines in equity placements and syndicated lending.

Beginning in September and intensifying in October, conditions for emerging market borrowers deteriorated: spreads widened across the board, and new bond issuance fell off sharply. The outlook is guarded and overall financing flows are expected to moderate further in the last quarter of 2000, according to the latest quarterly report. As conditions on bond and equity markets remain choppy, issuers will continue to exploit windows of opportunity, while the syndicated loan market is expected to remain supportive, the latest quarterly report shows.