|Statement||Tobias C. Hoschka.|
|Series||ERD working paper ;, no. 63, ERD working paper (Online) ;, no. 63.|
|Contributions||Asian Development Bank.|
|The Physical Object|
|LC Control Number||2005616974|
Download Citation | Developing the Market for Local Currency Bonds by Foreign Issuers: Lessons from Asia | This paper surveys the experience of countries in the East Asian region that have. This paper surveys the experience of countries in the East Asian region that have introduced local currency bonds by foreign issuers. The countries that are examined include Australia; Hong Kong, China; Japan; Republic of Korea; and Singapore. It is suggested that there are sound reasons for many countries to develop the market for foreign : Tobias C. Hoschka. Issuing medium to long-term local currency bonds rather than short-term foreign currency-denominated bonds could help emerging market economies to lower external vulnerabilities. IFIs contend that their own local currency bond issues help to develop domestic bond markets and thus support the reduction of external vulnerabilities. INTERNATIONAL MONETARY FUND THE WORLD BANK GROUP. STAFF NOTE FOR THE G20 IFAWG DEVELOPMENT OF LOCAL CURRENCY BOND MARKETS OVERVIEW OF RECENT DEVELOPMENTS AND KEY THEMES SEOUL, KOREA, J EXECUTIVE SUMMARY. At the Cannes Summit in , the G20 launched an initiative to develop local currency bond markets File Size: KB.
However, as with their smaller market sizes, local currency corporate bonds have generally shallower market depth than government bonds. The average depth of emerging Asia’s corporate bond markets is % of GDP. The Republic of Korea has the deepest market at % of GDP and it alone has a depth above 50%.Cited by: 4. Local-currency bond markets make up the bulk of the global bond market (right panel of Table 1), totaling $ trillion, or 92% of all bonds; the other 8% of outstanding bonds were issued in foreign currencies, primarily the dollar, euro, and Size: KB. broader context of domestic, regional, and global bond market development. Korea s experience provides valuable lessons for other emerging market economies also seeking to build bond markets for local and foreign issuers. The sophistication of the local bond market is not enough to make it appealing to foreign borrowers. Market development. Local currency bonds have also tended to be more liquid than. hard currency bonds during periods of risk aversion as the. domestic investor bases often step in to buy local currency. bonds, even as foreign investors may be fleeing them.
EM local currency debt market is highly concentrated with the ten largest issuers accounting for 81% of the local currency debt market and 74% of overall EM debt. With $ trillion, China’s market cap of outstanding local currency debt largest in EM space. 5 % % % % % % 1, 1, 2, 2, 3,File Size: KB. Investors have two options when it comes to investing in emerging market bonds. The first is to invest in the dollar-denominated debt issued by the world’s developing countries. Dollar-denominated simply means that the bonds are issued in U.S. dollar terms, so U.S. investors do not need to convert to foreign currencies when they purchase the bonds. to foreign currency (dollars) as well as in ation-indexed local currency bonds (see OECD, ). About two thirds of the African countries listed in T able 1 publish an of cial bond auction cal -. Hard currency bond ﬂows EM FX versus USD (right scale) Local currency bond ﬂows Oct. Jan. Apr. Oct. 5th–95th percentile OLS forecast Capital ﬂows at risk Constant Risk aversion Actual EM growth year Treasury yields Mar. Sep. 17 Mar. 18 Sep. 18 Mar. 19 Sep. 19 Total Total ﬂows Figure