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Developing Foreign Bond Markets: The Arirang Bond Experience in Korea

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  • Jonathan A. Batten
  • Peter G. Szilagyi

Abstract

This study investigates the development of Korea’s foreign bond (Arirang) market for won-denominated foreign bonds. We provide an institutional perspective and discuss the problems, concerns and key issues related to the development of this market. We find no evidence that Arirang issuance either crowded out local debt or had exchange rate implications. Overall, the Korean experience provides valuable lessons for other emerging nations seeking to build bond markets for local and foreign issuers. Instigating market development demands an enabling infrastructure, the nurturing of local and international demand and the deregulation of capital flows. This process is demanding, as the sophistication of the local bond market does not make it appealing to foreign borrowers per se.

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Bibliographic Info

Paper provided by IIIS in its series The Institute for International Integration Studies Discussion Paper Series with number iiisdp138.

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Date of creation: 23 May 2006
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Handle: RePEc:iis:dispap:iiisdp138

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Keywords: Arirang bonds; foreign bonds; bond market development;

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