The Fixed-Income Market in Uruguay

Edited version in Bond Markets in Latin America, ed. by Eduardo Borensztein, Kevin Cowan, Barry Eichengreen and Ugo Panizza (Cambridge, MA: MIT Press, 2008).

Spanish version in Banco Central del Uruguay Revista de Economía, May 2007.

49 Pages Posted: 13 Sep 2006 Last revised: 6 May 2019

See all articles by Julio De Brun

Julio De Brun

Universidad ORT at Uruguay - Department of Economics

Nestor Gandelman

Universidad ORT Uruguay

Herman Kamil

University of Michigan at Ann Arbor - Department of Economics

Arturo C. Porzecanski

American University - School of International Service

Date Written: August 1, 2006

Abstract

Uruguay's capital markets remain undeveloped despite the country's financial liberalization dating back to the 1970s, which was reinforced by passage of several additional laws in 1990s whose aim was to promote the local financial markets. The government is able to raise funds domestically in what is a liquid bond market, but private firms continue to fund themselves mostly out of retained earnings or else via bank loans and suppliers' credit. Moreover, when compared to others in Latin America, Uruguayan firms feature the highest ratios of liability dollarization, and corportate debt structures with the shortest maturities - currency and maturity mismatches that render them (and by extension, their creditors) extremely fragile. A deepening of the domestic capital market would probably alleviate this vulnerability of the Uruguayan economy. The financial fragility of Uruguayan firms amplified by corporate governance issues are the main impediments for the development of the capital markets. Given the current firm practices and the absence of sizeable institutional investors besides the Pension funds, the fixed income market will most likely remain a source of funding for very few firms.

Keywords: fixed income market, Uruguay

Suggested Citation

de Brun Mascheroni, Julio Ernesto and Gandelman, Nestor and Kamil, Herman and Porzecanski, Arturo C., The Fixed-Income Market in Uruguay (August 1, 2006). Edited version in Bond Markets in Latin America, ed. by Eduardo Borensztein, Kevin Cowan, Barry Eichengreen and Ugo Panizza (Cambridge, MA: MIT Press, 2008)., Spanish version in Banco Central del Uruguay Revista de Economía, May 2007., Available at SSRN: https://ssrn.com/abstract=929166 or http://dx.doi.org/10.2139/ssrn.929166

Julio Ernesto De Brun Mascheroni

Universidad ORT at Uruguay - Department of Economics ( email )

Bulevar España 2633
Montevideo, 11.300
Uruguay
598-2 77-1806 (Phone)
598-2 78-8810 (Fax)

Nestor Gandelman (Contact Author)

Universidad ORT Uruguay ( email )

Bulevar España 2633
Montevideo, 11.300
Uruguay

Herman Kamil

University of Michigan at Ann Arbor - Department of Economics ( email )

611 Tappan Street
Ann Arbor, MI 48109-1220
United States

Arturo C. Porzecanski

American University - School of International Service ( email )

4400 Massachusetts Ave, NW
Washington, DC 20016
United States

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