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

Abstract

International bond issuance by debut issuers has risen in recent years. The uptick was a result of both demand and supply factors. The search for yield and demand for portfolio diversification have resulted in demand-driven easy financing conditions. At the same time, rising financing needs for many debut issuers, coupled with reduced access to concessional financing, relatively undeveloped domestic markets, and a favorable interest rate environment have made international bonds an attractive financing alternative for many countries. As bonds issued in the international markets are typically denominated in hard currencies, have large volumes and a bullet structure, exposure to exchange rate and refinancing risk has increased. Therefore, risk-mitigating policy actions are needed to prepare for redemption, support debt sustainability, and secure adequate debt management capacity.

Keywords: Bond issues, International bond markets, Bonds, External borrowing, External debt, Fiscal risk, Bond market, public debt, market access, LICs, frontier markets., bond, international bond, bond issuance, global bond, international bonds, bond issuances, sovereign bond, international reserves, bond spreads, international capital, currency risk, bond yields, bond markets, interest rate risk, debt stock, international capital markets, bond yield, eurobonds, hedge, financial markets, market bond, global bonds, eurobond, hedge funds, foreign bond markets, foreign bond, bond issuers, government bonds, international financial markets, international currencies, cash deposit, bond issue, access to int

JEL Classification: E43, F34, G12, G15, G32