Sienaert, Alex2013-01-252013-01-252012-12https://hdl.handle.net/10986/12152Foreign investors are increasingly important participants in the local currency sovereign bond markets of developing countries. This note provides context on the overall growth of local currency sovereign debt markets in emerging markets and the growth of foreign investor participation in these markets, a short review of the relevant academic literature, and a summary of the sources of foreign demand. The note concludes with a discussion of the implications of growing foreign investor participation for the managers of public domestic debt in developing countries. The aim of the note is to provide a useful, practically-oriented primer for debt managers beginning to engage on this issue, and in particular to facilitate moving the dialogue beyond overly simple categorizations of countries as "emerging markets" and of investors as a homogeneous source of "hot money".en-USCC BY 3.0 IGOACCOUNTINGAGGREGATE BOND INDEXARBITRAGEASSET CLASSASSET CLASSESASSET MANAGEMENTASSET MANAGERSASSET PRICESBALANCE SHEETBALANCE SHEETSBANK POLICYBANKING SECTORBASIS POINTBENCHMARK BONDBOND FLOWSBOND FUNDBOND INDEXBOND INDICESBOND ISSUANCEBOND ISSUERSBOND ISSUESBOND MARKETBOND MARKET DEVELOPMENTBOND MARKET VALUEBOND PRICESBOND YIELDSBONDSBORROWING COSTSBORROWING REQUIREMENTSBUY-BACKSCAPITAL ACCOUNTCAPITAL ACCOUNT LIBERALIZATIONCAPITAL ALLOCATIONCAPITAL INFLOWSCAPITAL MARKETSCENTRAL BANKCENTRAL BANKSCOLLATERALCOMMERCIAL BANKINGCORPORATE BONDCORPORATE BOND RETURNSCOUPONCREDIT DERIVATIVECREDIT DERIVATIVESCREDIT QUALITYCREDIT RISKCURRENCY COMPOSITIONCURRENCY RISKSCUSTODYDEBT INSTRUMENTSDEBT ISSUANCEDEBT ISSUANCESDEBT MARKETDEBT RATIODERIVATIVE CONTRACTSDERIVATIVE MARKETDERIVATIVES MARKETDERIVATIVES MARKETSDEVELOPING COUNTRIESDEVELOPING COUNTRYDEVELOPMENT BANKDOMESTIC BONDDOMESTIC BOND MARKETDOMESTIC BOND MARKET DEVELOPMENTDOMESTIC BOND MARKETSDOMESTIC BONDSDOMESTIC CAPITALDOMESTIC CAPITAL MARKETSDOMESTIC CURRENCYDOMESTIC DEBTDOMESTIC DEBT MARKETSDOMESTIC GOVERNMENT BONDSDOMESTIC MARKETDOMESTIC MARKETSDOMESTIC SECURITIESECONOMIC DEVELOPMENTECONOMIC POLICIESEMERGING ECONOMIESEMERGING MARKETEMERGING MARKET ECONOMIESEMERGING MARKETSEQUITIESEXTERNAL DEBTFEDERAL RESERVEFEDERAL RESERVE BANKFINANCIAL CRISISFINANCIAL INTEGRATIONFINANCIAL MARKETFINANCIAL STABILITYFISCAL POLICIESFIXED INCOMEFOREIGN CAPITALFOREIGN CURRENCYFOREIGN EXCHANGEFOREIGN HOLDINGSFOREIGN INVESTMENTFOREIGN INVESTORFOREIGN INVESTORSFOREIGN OWNERSHIPGLOBAL BONDGLOBAL BOND INDICESGLOBAL BOND MARKETGLOBAL CAPITALGLOBAL CAPITAL MARKETSGLOBAL FINANCIAL STABILITYGLOBAL MARKETGOVERNMENT BONDGOVERNMENT DEBTGOVERNMENT DEBT SECURITIESGOVERNMENT SECURITIESHEDGE FUNDHEDGE FUND INVESTORSHEDGE FUNDSHOLDINGSINCOME LEVELINFLATIONINFLATION RISKINSTRUMENTINSURANCEINSURANCE COMPANIESINTERNATIONAL BANKINTERNATIONAL BONDSINTERNATIONAL SECURITIESINTERNATIONAL SETTLEMENTSINVESTMENT BANKSINVESTMENT DECISIONSINVESTMENT FUNDSINVESTMENT HORIZONSINVESTMENT IN BONDSINVESTOR BASEINVESTOR CONFIDENCEINVESTOR DEMANDINVESTOR INTERESTINVESTOR PARTICIPATIONINVESTOR RELATIONSISSUANCELEVYLIQUIDATIONLIQUIDATIONSLIQUIDITYLOCAL CURRENCYLOCAL MARKETLOCAL MARKETSLONG-TERM INVESTMENTLONG-TERM INVESTORSLONG-TERM YIELDSMARKET CAPITALIZATIONMARKET CONDITIONSMARKET DEBTMARKET DEVELOPMENTMARKET DEVELOPMENTSMARKET EFFICIENCIESMARKET INFRASTRUCTUREMARKET INTEGRATIONMARKET LIQUIDITYMARKET PARTICIPANTSMARKET PRICEMARKET SIZEMATURITYMATURITY STRUCTUREMONETARY AUTHORITIESNET DEBTOFFSHORE INVESTOROFFSHORE INVESTORSOFFSHORE MARKETSOUTSTANDING GOVERNMENT SECURITIESPENSIONPENSION FUNDSPORTFOLIOPORTFOLIO DIVERSIFICATIONPORTFOLIO INVESTMENTPRICE DISCOVERYPRIMARY DEALERSPUBLIC BORROWINGPUBLIC DEBTPUBLIC DEBT MANAGEMENTPUBLIC DEBT MANAGERSPUBLIC DEBT SECURITIESPUBLIC INVESTMENTRANGE OF INVESTORRAPID GROWTHREGULATORY CONSTRAINTSREPOREPO MARKETSRESERVERESERVESRETAIL INVESTORSRETURNRETURNSRISK MANAGEMENTRISK PROFILERISKY ASSETRISKY ASSETSSECONDARY MARKETSECONDARY MARKET LIQUIDITYSECURITIESSECURITIES MARKETSSETTLEMENTSETTLEMENT INFRASTRUCTURESINKING FUNDSOVEREIGN BONDSOVEREIGN BOND MARKETSSOVEREIGN BONDSSOVEREIGN DEBTSOVEREIGN DEBT MARKETSSOVEREIGN RATINGSSTOCK EXCHANGESTOCK EXCHANGESSWAPT-BILLSTRADINGTRANSACTIONTRANSACTION COSTSTREASURIESTREASURYTREASURY SECURITIESTREASURY SECURITYWAREHOUSEYIELD CURVEWorld Bank10.1596/1813-9450-6284