Low-Income Countries’ Access to Private Debt Markets

Hostland, Doug2012-03-192012-03-192009-01-01https://hdl.handle.net/10986/4026Private debt flows to developing countries surged to record levels over the period 2003-07. A few low-income countries have gained access to the international bond market but the bulk of the flows have continued to go to just a few large middle-income countries. Most low-income countries still heavily depend on concessional loans and grants from the official sector to meet their financing needs. The paper provides an overview of low-income countries' access to cross-border bank lending and bond issuance in the international market over the past few decades. It highlights some stylized facts that characterize salient features of low-income countries' experience in external borrowing from the private sector and discusses the various factors that influence governments' and corporations' decisions to seek external financing along with creditors' decisions to provide the financing. The paper concludes by assessing the prospects for low-income countries' access to private debt markets over the medium term.CC BY 3.0 IGOACCOUNTINGASSET CLASSASYMMETRIC INFORMATIONAVAILABILITY OF CREDITAVERAGE DEBTBALANCE OF PAYMENTSBANK LENDINGBANK LOANBANK LOANSBASIS POINTSBINDING CONSTRAINTBOND INDEXESBOND ISSUANCEBOND ISSUEBOND ISSUESBOND SPREADBOND SPREADSBONDSBORROWING REQUIREMENTSBUDGET DEFICITSBUSINESS CLIMATECALCULATIONCAPITAL ACCOUNTSCAPITAL FLOWCAPITAL FLOWSCAPITAL INFLOWSCENTRAL GOVERNMENT DEBTCOLLATERALCOMMERCIAL BANKCOMMERCIAL BANKSCOMMERCIAL TERMSCOMMODITYCOMMODITY PRICESCORPORATE BONDCORPORATE BOND ISSUANCECORPORATE BONDSCREDIT RATINGCREDIT RATINGSCREDIT RATIONINGCREDIT-RATING AGENCIESCREDITORSCURRENCY CRISESCURRENT ACCOUNTCURRENT ACCOUNT DEFICITSDEBT BURDENDEBT BURDENSDEBT CRISESDEBT CRISISDEBT DEFAULTDEBT INSTRUMENTSDEBT ISSUANCEDEBT LEVELSDEBT MANAGEMENTDEBT OUTSTANDINGDEBT RELIEFDEBT SECURITIESDEBT SUSTAINABILITYDEBTORDEBTOR REPORTING SYSTEMDEBTORSDEFAULT RISKDEFAULTSDERIVATIVEDERIVATIVE MARKETSDEVELOPING COUNTRIESDEVELOPMENT BANKDISBURSEMENTSDOMESTIC BORROWINGDOMESTIC CAPITALDOMESTIC CAPITAL MARKETSDOMESTIC CURRENCYDOMESTIC DEBTDOMESTIC DEBT MARKETSDOMESTIC FINANCIAL MARKETDOMESTIC FINANCIAL MARKETSDOMESTIC INTEREST RATESDOMESTIC MARKETDOMESTIC MARKETSECONOMIC POLICIESEMERGING ECONOMIESEMERGING MARKETEMERGING MARKET BONDEMERGING MARKET COUNTRIESEMERGING MARKET DEBTEMERGING MARKET ECONOMIESEMERGING MARKETSEQUITY FLOWSEQUITY ISSUANCEEQUITY MARKETSEUROBONDEXTERNAL BORROWINGEXTERNAL DEBTEXTERNAL FINANCEEXTERNAL FINANCINGFEDERAL RESERVEFEDERAL RESERVE BANKFINANCIAL CRISISFINANCIAL FLOWSFINANCIAL INSTITUTIONSFINANCIAL SECTORFINANCIAL SECTOR DEVELOPMENTFINANCIAL STABILITYFISCAL POLICYFLEXIBLE EXCHANGE RATEFOREIGN DIRECT INVESTMENTFOREIGN INVESTORSFUND MANAGERSGLOBAL CAPITALGLOBAL CAPITAL MARKETSGLOBAL FINANCIAL STABILITYGLOBALIZATIONGOVERNMENT BONDGOVERNMENT BOND YIELDSGOVERNMENT DEBTIMPLICIT INTERESTINCOME LEVELINCOME LEVELSINCOME SOURCEINCOMESINFLATIONINFLATION RATESINFORMATION CONSTRAINTSINSTITUTIONAL INVESTORSINSURANCEINTEREST RATEINTEREST RATESINTERNATIONAL BANKINTERNATIONAL BONDINTERNATIONAL BOND MARKETINTERNATIONAL CAPITALINTERNATIONAL CAPITAL MARKETSINTERNATIONAL DEBTINTERNATIONAL DEBT MARKETINTERNATIONAL DEVELOPMENTINTERNATIONAL FINANCIAL INTEGRATIONINTERNATIONAL FINANCIAL MARKETSINTERNATIONAL FINANCIAL STATISTICSINTERNATIONAL INTERESTINTERNATIONAL MARKETINTERNATIONAL MARKETSINVESTMENT BANKSINVESTMENT CLIMATEINVESTMENT FUNDSINVESTMENT OPPORTUNITIESINVESTOR BASEINVESTOR CONFIDENCELEVYLIQUIDITYLOAN TRANSACTIONSLONG-TERM LOANSLOW INCOMELOW INTEREST RATESLOW- INCOMELOW-INCOMELOWER INCOMEMACROECONOMIC DATAMACROECONOMIC ENVIRONMENTMACROECONOMIC INSTABILITYMACROECONOMIC VOLATILITYMARKET ACCESSMARKET CONDITIONSMARKET INTEREST RATESMARKET LIQUIDITYMARKET PARTICIPANTSMATURITIESMATURITYMATURITY STRUCTUREMONETARY FUNDMONEY MARKETMORAL HAZARDMUTUAL FUNDSOUTSTANDING DEBTPENSIONPORTFOLIOPRIVATE CAPITALPRIVATE CAPITAL INFLOWSPRIVATE CREDITPRIVATE CREDITORSPRIVATE DEBTPRIVATE DEBT FLOWSPRIVATE DEBT MARKETPRIVATE DEBT MARKETSPRIVATE EQUITYPRIVATE PLACEMENTPRIVATE SECTOR CREDITPROFITABLE INVESTMENTPUBLIC BANKPUBLIC DEBTPUBLIC INVESTMENTPUBLIC SECTOR BORROWINGREMITTANCESREPUDIATIONRESEARCH ASSISTANCERESERVESRETURNSRISK OF DEFAULTSAVINGSSHORT-TERM DEBTSOVEREIGN BONDSOVEREIGN BONDSSOVEREIGN DEBTSOVEREIGN ISSUESOVEREIGN ISSUERSSOVEREIGN ISSUESTOTAL DEBTTRADE FINANCINGTRANSACTIONS COSTSTREASURYTREASURY BILLTREASURY BILLSTREASURY BONDSVALUABLELow-Income Countries’ Access to Private Debt MarketsWorld Bank10.1596/1813-9450-4829