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The recent round of debt relief has restored debt sustainability in many low-income countries (LICs). This, along with a continued search for yield and desire for portfolio diversification by investors, has increased the range of viable financing options, including international bonds, for many emerging market (EM) economies and LICs. This paper presents some of the advantages and disadvantages of international debut bonds, within a debt sustainability framework. It outlines key preconditions and discusses strategic considerations that countries need to take into account when contemplating bond issuance in international markets for the first time. In this context, the paper also discusses some typical pitfalls in accessing international capital markets, including excessive issue size relative to the intended use of bond proceeds, issuance of bullet bonds, and inadequate preparation for accessing the markets.

Bonds --- Risk management --- Debts, Public --- Bond issues --- Debentures --- Insurance --- Management --- Negotiable instruments --- Securities --- Stocks --- Finance: General --- Investments: Bonds --- Public Finance --- General Financial Markets: General (includes Measurement and Data) --- Debt --- Debt Management --- Sovereign Debt --- Investment & securities --- Public finance & taxation --- Finance --- International bonds --- Government debt management --- International capital markets --- Sovereign bonds --- Capital market --- Egypt, Arab Republic of

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The paper presents a measure of monetary impulse that is intended to reflect the medium-term inflationary implications of a nation’s current monetary policy. The measure consists of the growth rate of the monetary base, adjusted for reserve requirement changes and augmented by an implicit forecast of future growth rates of base velocity. Time series plots of the impulse measure for the G-7 countries are presented, and are compared with plots of inflation and of two alternative monetary indicators—the yield curve slope and the growth rate of a broad monetary aggregate. The impulse measure serves well as a medium-term indicator of future inflation, and on balance matches or outperforms the alternative indicators.

Inflation --- Investments: Bonds --- Money and Monetary Policy --- Monetary Policy --- Price Level --- Deflation --- Prices, Business Fluctuations, and Cycles: Forecasting and Simulation --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- General Financial Markets: General (includes Measurement and Data) --- Monetary economics --- Macroeconomics --- Investment & securities --- Monetary aggregates --- Monetary base --- Sovereign bonds --- Bond yields --- Money --- Prices --- Financial institutions --- Money supply --- Bonds --- Germany

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Crises on external sovereign debt are typically defined as defaults. Such a definition accurately captures debt-servicing difficulties in the 1980s, a period of numerous defaults on bank loans. However, defining defaults as debt crises is problematic for the 1990s, when sovereign bond markets emerged. In contrast to the 1980s, the 1990s are characterized by significant foreign debt-servicing difficulties but fewer sovereign defaults. In order to capture this evolution of debt markets, we define debt crises as events occurring when either a country defaults or its bond spreads are above a critical threshold. We find that our definition outperforms the default-based definition in capturing debt-servicing difficulties and, consequently, in fitting the post-1994 period. In particular, liquidity indicators are significant in explaining our definition of debt crises, while they do not play any role in explaining defaults after 1994.

Banks and Banking --- Exports and Imports --- Finance: General --- Financial Risk Management --- Investments: Bonds --- Financial Crises --- International Lending and Debt Problems --- General Financial Markets: General (includes Measurement and Data) --- Interest Rates: Determination, Term Structure, and Effects --- Economic & financial crises & disasters --- International economics --- Finance --- Investment & securities --- Financial crises --- Debt default --- Yield curve --- Securities markets --- Sovereign bonds --- Debts, External --- Interest rates --- Capital market --- Bonds --- United States

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This paper analyzes yield spreads on sovereign debt issued by emerging markets using modern data from the 1990s and newly-collected historical data on debt traded in London during 1870–1913, a previous “golden era” for international capital market integration. Applying several empirical approaches, we show that the co-movement of spreads across emerging markets is higher today than it was in the historical sample. We also show that sharp changes in spreads today tend to be mostly related to global events, whereas country-specific events played a bigger role in 1870–1913. Although we find some evidence that economic fundamentals, too, co-move more strongly today than at that earlier time, our interpretation of the results is that today’s investors pay less attention to country-specific events than their predecessors did in 1870–1913.

Banks and Banking --- Finance: General --- Investments: Bonds --- International Financial Markets --- Economic History: Financial Markets and Institutions: General, International, or Comparative --- General Financial Markets: General (includes Measurement and Data) --- Interest Rates: Determination, Term Structure, and Effects --- Finance --- Investment & securities --- Emerging and frontier financial markets --- Sovereign bonds --- Bonds --- Bond yields --- Yield curve --- Financial markets --- Financial institutions --- Financial services --- Financial services industry --- Interest rates --- Argentina

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The paper documents institutional reforms that have taken place in the government debt markets of many industrial countries since the early 1980s, and investigates the impact of three key changes: (i) the move from relationship financing to market funding; (ii) the introduction of options; and (iii) the introduction of futures. Variance ratio tests on bond data for 14 industrial countries indicate that the move to market funding increased the volatility of bond yields and improved the informational efficiency of the secondary markets. The introduction of options and futures increased the informational efficiency of the underlying market, but did not have a stabilizing effect.

Finance: General --- Investments: Bonds --- Investments: Futures --- Investments: Options --- Debt --- Debt Management --- Sovereign Debt --- General Financial Markets: General (includes Measurement and Data) --- Information and Market Efficiency --- Event Studies --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- Finance --- Investment & securities --- Futures --- Sovereign bonds --- Options --- Stock markets --- Bond yields --- Financial institutions --- Financial markets --- Derivative securities --- Bonds --- Stock exchanges --- France