UNCTAD´s Sixth Debt Management

UNCTAD´s Sixth Debt Management

21/11/07

EMERGING CAPITAL MARKETS


Size, Trends, and Regional Characteristics.
Mr. David T. Beers, Managing Director,
Sovereign & International Public Finance Ratings,
Standard & Poor’s, UK



Recent Market Behavior

- The global market turbulence since July 2007 has had only a muted impact on the EM sector.
- New sovereign foreign currency debt issuance by Ghana, Sri Lanka, and especially other countries in Africa.

Emerging Market Sovereign Bond Spreads by Rating

- Liquidity, hedging mechanisms developing but often limited
- Foreign investors participation rising in benign market condition, but will that change?
- Foreign participation in local markets can be expected to fall in periods of financial distress, as in Mexico, Russia, and Turkey in the past.
- How will local currency denominated, foreign currency payable debt governed under NY or English law fare in future debt restructurings?
- Will select restructurings of inflation linked bonds damage cross-border investor interest in this instrument?
- More classes of debt have potential to change issue and investor dynamics in restructurings in ways that are hard to predict.




FORMULATION OF STRATEGIES FOR ENTERING DOMESTIC
AND INTERNATIONAL CAPITAL MARKETS


Mr. Udaibir Saran Das, Division Chief,
Monetary & Capital Markets Department, IMF
What if the Outlook Worsens?
Unlikely to lead to major pull backs by foreign banks and portfolio investors.

LICs as an Asset Class
Experience of Eastern Europe relevant for Africa?
Should non-concessionnal borrowing from International markets be limited?

Offshore Financing
Subsidiaridies of large banks
Currency option market

Growing Investor Interest in the last “frontier”?
Benefits of International assurance.
Use a proceed is a key factor for early decision

Commons Errors
- Issue sizes rush to market under pricing
- Poor selection of lead managers
- Insufficient choice of proposals
- Weak investors base
- Issuing without formulating debt strategy
- Delay










Mr. Tadashi Endo, Senior Financial Sector Specialist,
Corporate Governance and Capital Markets Department, World Bank



Two dimensions for buildings confidence and attracting longer-tem funding
- Common factors for liquid government bond market supply, demand, and intermediation.
- Building Blocks for Yield Curve and Low-cost Public Debt

3 pillars approach to support liquid secondary market of government bonds

Yeld-seeking Assets
market microstructure
Performance competition

We need policy coordination between.
- Debt management Office
- Capital Market Regulator
- Contractual Saving Regulators
- Central Bank



Damien AFONSO