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First-Time International Bond Issuance – New Opportunities and Emerging Risks

Jul 18, 2014 | A. Guscina, G. Pedras, G. Presiuttini | IMF
International bond issuance by debut issuers has risen in recent years. This movement is a result of both demand and supply factors. While international bond issuance carries potential benefits for frontier markets, this trend is associated with risks that have to be mitigated. The objectives of the paper are to explore the rationale behind this movement, to analyze the possible implications of such issuances on risks facing the sovereign, and to suggest policy actions to mitigate them. The paper will explore the extent to which debut issuers have accessed international markets and the reasons behind this movement. It will also analyze how these bonds fared in terms of pricing and evaluate possible implications of such issuances for the rising exchange, interest rate, and refinancing risks on the sovereign balance sheets. The paper then suggests some policy actions to mitigate the main risks.