Foreign Investment in Local Currency Bonds : Considerations for Emerging Market Public Debt Managers

Foreign 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".

Bibliographic Details

Main Author:	Sienaert, Alex
Language:	English en_US
Published:	World Bank, Washington, DC 2012-12
Subjects:	ACCOUNTING, AGGREGATE BOND INDEX, ARBITRAGE, ASSET CLASS, ASSET CLASSES, ASSET MANAGEMENT, ASSET MANAGERS, ASSET PRICES, BALANCE SHEET, BALANCE SHEETS, BANK POLICY, BANKING SECTOR, BASIS POINT, BENCHMARK BOND, BOND FLOWS, BOND FUND, BOND INDEX, BOND INDICES, BOND ISSUANCE, BOND ISSUERS, BOND ISSUES, BOND MARKET, BOND MARKET DEVELOPMENT, BOND MARKET VALUE, BOND PRICES, BOND YIELDS, BONDS, BORROWING COSTS, BORROWING REQUIREMENTS, BUY-BACKS, CAPITAL ACCOUNT, CAPITAL ACCOUNT LIBERALIZATION, CAPITAL ALLOCATION, CAPITAL INFLOWS, CAPITAL MARKETS, CENTRAL BANK, CENTRAL BANKS, COLLATERAL, COMMERCIAL BANKING, CORPORATE BOND, CORPORATE BOND RETURNS, COUPON, CREDIT DERIVATIVE, CREDIT DERIVATIVES, CREDIT QUALITY, CREDIT RISK, CURRENCY COMPOSITION, CURRENCY RISKS, CUSTODY, DEBT INSTRUMENTS, DEBT ISSUANCE, DEBT ISSUANCES, DEBT MARKET, DEBT RATIO, DERIVATIVE CONTRACTS, DERIVATIVE MARKET, DERIVATIVES MARKET, DERIVATIVES MARKETS, DEVELOPING COUNTRIES, DEVELOPING COUNTRY, DEVELOPMENT BANK, DOMESTIC BOND, DOMESTIC BOND MARKET, DOMESTIC BOND MARKET DEVELOPMENT, DOMESTIC BOND MARKETS, DOMESTIC BONDS, DOMESTIC CAPITAL, DOMESTIC CAPITAL MARKETS, DOMESTIC CURRENCY, DOMESTIC DEBT, DOMESTIC DEBT MARKETS, DOMESTIC GOVERNMENT BONDS, DOMESTIC MARKET, DOMESTIC MARKETS, DOMESTIC SECURITIES, ECONOMIC DEVELOPMENT, ECONOMIC POLICIES, EMERGING ECONOMIES, EMERGING MARKET, EMERGING MARKET ECONOMIES, EMERGING MARKETS, EQUITIES, EXTERNAL DEBT, FEDERAL RESERVE, FEDERAL RESERVE BANK, FINANCIAL CRISIS, FINANCIAL INTEGRATION, FINANCIAL MARKET, FINANCIAL STABILITY, FISCAL POLICIES, FIXED INCOME, FOREIGN CAPITAL, FOREIGN CURRENCY, FOREIGN EXCHANGE, FOREIGN HOLDINGS, FOREIGN INVESTMENT, FOREIGN INVESTOR, FOREIGN INVESTORS, FOREIGN OWNERSHIP, GLOBAL BOND, GLOBAL BOND INDICES, GLOBAL BOND MARKET, GLOBAL CAPITAL, GLOBAL CAPITAL MARKETS, GLOBAL FINANCIAL STABILITY, GLOBAL MARKET, GOVERNMENT BOND, GOVERNMENT DEBT, GOVERNMENT DEBT SECURITIES, GOVERNMENT SECURITIES, HEDGE FUND, HEDGE FUND INVESTORS, HEDGE FUNDS, HOLDINGS, INCOME LEVEL, INFLATION, INFLATION RISK, INSTRUMENT, INSURANCE, INSURANCE COMPANIES, INTERNATIONAL BANK, INTERNATIONAL BONDS, INTERNATIONAL SECURITIES, INTERNATIONAL SETTLEMENTS, INVESTMENT BANKS, INVESTMENT DECISIONS, INVESTMENT FUNDS, INVESTMENT HORIZONS, INVESTMENT IN BONDS, INVESTOR BASE, INVESTOR CONFIDENCE, INVESTOR DEMAND, INVESTOR INTEREST, INVESTOR PARTICIPATION, INVESTOR RELATIONS, ISSUANCE, LEVY, LIQUIDATION, LIQUIDATIONS, LIQUIDITY, LOCAL CURRENCY, LOCAL MARKET, LOCAL MARKETS, LONG-TERM INVESTMENT, LONG-TERM INVESTORS, LONG-TERM YIELDS, MARKET CAPITALIZATION, MARKET CONDITIONS, MARKET DEBT, MARKET DEVELOPMENT, MARKET DEVELOPMENTS, MARKET EFFICIENCIES, MARKET INFRASTRUCTURE, MARKET INTEGRATION, MARKET LIQUIDITY, MARKET PARTICIPANTS, MARKET PRICE, MARKET SIZE, MATURITY, MATURITY STRUCTURE, MONETARY AUTHORITIES, NET DEBT, OFFSHORE INVESTOR, OFFSHORE INVESTORS, OFFSHORE MARKETS, OUTSTANDING GOVERNMENT SECURITIES, PENSION, PENSION FUNDS, PORTFOLIO, PORTFOLIO DIVERSIFICATION, PORTFOLIO INVESTMENT, PRICE DISCOVERY, PRIMARY DEALERS, PUBLIC BORROWING, PUBLIC DEBT, PUBLIC DEBT MANAGEMENT, PUBLIC DEBT MANAGERS, PUBLIC DEBT SECURITIES, PUBLIC INVESTMENT, RANGE OF INVESTOR, RAPID GROWTH, REGULATORY CONSTRAINTS, REPO, REPO MARKETS, RESERVE, RESERVES, RETAIL INVESTORS, RETURN, RETURNS, RISK MANAGEMENT, RISK PROFILE, RISKY ASSET, RISKY ASSETS, SECONDARY MARKET, SECONDARY MARKET LIQUIDITY, SECURITIES, SECURITIES MARKETS, SETTLEMENT, SETTLEMENT INFRASTRUCTURE, SINKING FUND, SOVEREIGN BOND, SOVEREIGN BOND MARKETS, SOVEREIGN BONDS, SOVEREIGN DEBT, SOVEREIGN DEBT MARKETS, SOVEREIGN RATINGS, STOCK EXCHANGE, STOCK EXCHANGES, SWAP, T-BILLS, TRADING, TRANSACTION, TRANSACTION COSTS, TREASURIES, TREASURY, TREASURY SECURITIES, TREASURY SECURITY, WAREHOUSE, YIELD CURVE,
Online Access:	http://documents.worldbank.org/curated/en/2012/12/17027882/foreign-investment-local-currency-bonds-considerations-emerging-market-public-debt-managers https://hdl.handle.net/10986/12152
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