sovereign bond issuance - world bank€¦ · considerations….embi vs non-embi sri lanka bahamas...
TRANSCRIPT
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Sovereign Bond Issuance
Debt Manager’s Network Webinar
30 September 2014
Pamella McLaren
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Outline
• Pre-requisite
• Objectives
• Considerations
• Pros
• Cons
• Procedures
• Current Environment
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Pre-requisite
Debt
Sustainability
MTDS
Macro StabilityInstitutional
Arrangements
Investor Assurance
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Sovereign Bond Issuance
Issue
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Objectives ….Core
Fiscal Deficit
BOPRefinance Maturing
Debt
Under Developed Domestic Market
Crowding Out
Private Sector
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Objectives….Secondary
Benchmarking
For Private Sector Borrowing
Diversify Investor Base
Debt Restructuring
Maturity Extension
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Objectives….Seasoned Issuers
Re-opening to Build Benchmark
Liability Management Operations
Other Public Debt Management Objectives
Reduce Refinancing Risk
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Sovereign Bond Issuance
Considerations
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Considerations…Issuance Strategy
Pre-fund Carry-Costs EMBI
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Considerations….EMBI vs Non-EMBI
Sri Lanka
Bahamas
Turkey
Ecuador Kenya
JamaicaIvory Coast
Brazil
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Jan-14 Feb-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jun-14 Jul-14 Jul-14 Jul-14
US$
Mill
ion
s
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Considerations….Currency
Currency Mismatches
Market Depth and Liquidity
Issuing in Domestic
Currencies
Currency Swap Instruments
$ € ¥ £
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Considerations….Currency
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Considerations…..Issuing Mechanism
Shelf Registration
Rule 144A
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Considerations…Placement
Investor
Base• Hedge Fund
Manager
• Asset Manager
• Investment manager
Other
• Legal Jurisdiction
• Geographical distribution
Post Issuance
• Secondary Market Trading
• Re-opening
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Considerations….Market Issuance
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Sovereign Bond Issuance
Pros
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Pros….
Fast Disbursing
No Reporting Requirements
Flexibility in use of Proceeds/Conditionalities
Board Approvals
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Sovereign Bond Issuance
Cons
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Cons….Is it Worth It?
Fees
Documentation
Annual Reporting
Disclosure
Market Conditions
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Cons….High Cost
Reduced Access Concessional Financing
High Debut Premium
Illiquidity Premium
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Cons
No Technical Assistance
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Sovereign Bond Issuance
Procedures
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Procedures
Bond Proceeds
Advisor
Legal Advisors
Deal/Non-deal Road
Show
Rating Agencies
Lead Manager
Execution
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Current Environment
Strong Investor
Appetite
YieldLock in Interest Rates
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Thank You