On The Determinants of First-Time Sovereign Bond Issues, Issues 2003-2184
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 looks at the determinants of sovereign bond issuances and derives the relationship between internal and external factors and market access using a simple macro model. The market access condition is then translated into a simple rule that requires an excess demand for the sovereign bonds in question. Regression results based on this model offer some insights into peculiarities of first-time sovereign bond issues that could be used in policy deliberations.
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Accessu Baseline Regression bonds i.e. borrowing Chile coefficient Consumer price inflation controlled by dummy creditors debt demand for external demand for funds dependent variable developing countries dummy variables Egypt El Salvador emerging market bond emerging market sovereign Estonia Euler equation excess demand external funds financing first-time access first-time and subsequent first-time issues Fiscal balance GDP per capita Gelos Grenada IMF program indicators international capital markets International interest rate investment issuance takes place issue a bond issuer Latvia likelihood logit estimation Likelihood ratio test market bond issues market sovereign bond Maximum likelihood Maximum likelihood logit Moldova Pakistan Papua New Guinea PPP-adjusted GDP Predicted Probability probability of access probability of market productivity shock Qatar Real GDP growth Regression Results risk-free risk-free bond Robustness Tests second FOC sovereign bond issuance Sovereign Bond Issues sovereign's GDP Sri Lanka subsequent bond issues subsequent issues substituting equation supply of external utility function