Foreign Bond Markets and Financial Market Development: International Perspectives
The domestic bond markets of the Asia and Pacific region have grown considerably since the Asian financial crisis of 1997, although they remain undeveloped relative to the region's weight in the world economy. This paper proposes that in order to encourage further development of these markets, regulators should make them more accessible to foreign borrowers. To that end we offer insights into the nature and mechanics of foreign bond issuance by investigating the key characteristics of 3,132 foreign bonds issued in 14 countries (other than the United States) between July 1928 and June 2009. We found that the foreign borrowers that tap domestic markets are overwhelmingly of high credit quality and comprise sovereigns, supranationals, and major financial institutions. There is a preference for simple fixed-rate payment structures, which can then be swapped into the currency and coupon type of choice using currency and interest rate derivatives. On the whole, the long-term viability of foreign bond markets appears linked to the presence of highly liquid foreign exchange and derivatives markets that facilitate risk management and transformation, enabling regulation that facilitates cooperation with market participants, the presence of benchmark issues, and competitive pricing between alternate market segments.
|Date of creation:||08 Dec 2009|
|Date of revision:|
|Contact details of provider:|| Postal: Kasumigaseki Building 8F, 3-2-5, Kasumigaseki, Chiyoda-ku, Tokyo 100-6008, Japan|
Fax: (81-3) 3593-5571
Web page: http://www.adbi.org/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kee-Hong Bae & Young Sup Yun & Warren Bailey, 2006. "Determinants of bond holdings by foreign investors," BIS Papers chapters, in: Bank for International Settlements (ed.), Asian bond markets: issues and prospects, volume 30, pages 102-128 Bank for International Settlements.
- Jonathan A. Batten & Warren P. Hogan & Peter G. Szilagyi, 2011. "The Role of Foreign Bond Issuance: The Case of Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 44(1), pages 36-50, 03.
- Honda, Etsuro, 2003. "Financial deregulation in Japan," Japan and the World Economy, Elsevier, vol. 15(1), pages 135-140, January.
- Barry Eichengreen & Pipat Luengnaruemitchai, 2004.
"Why Doesn't Asia Have Bigger Bond Markets?,"
NBER Working Papers
10576, National Bureau of Economic Research, Inc.
- Robert McCauley & Guorong Jiang, 2004. "Diversifying with Asian local currency bonds," BIS Quarterly Review, Bank for International Settlements, September.
- Hans J. Blommestein & Javier Santiso, 2007. "New Strategies for Emerging Domestic Sovereign Bond Markets," OECD Development Centre Working Papers 260, OECD Publishing.
- Burger, John D. & Warnock, Francis E., 2007.
"Foreign participation in local currency bond markets,"
Review of Financial Economics,
Elsevier, vol. 16(3), pages 291-304.
- John D. Burger & Francis E. Warnock, 2004. "Foreign participation in local-currency bond markets," International Finance Discussion Papers 794, Board of Governors of the Federal Reserve System (U.S.).
- John D. Burger & Francis E. Warnock, 2006. "Foreign Participation in Local Currency Bond Markets," NBER Working Papers 12548, National Bureau of Economic Research, Inc.
- Kristin J. Forbes, 2005. "Capital Controls: Mud in the Wheels of Market Efficiency," Cato Journal, Cato Journal, Cato Institute, vol. 25(1), pages 153-166, Winter.
- Shankha Chakraborty & Tridip Ray, 2003.
"Bank-based versus Market-based Financial Systems: A Growth-theoretic Analysis,"
University of Oregon Economics Department Working Papers
2003-6, University of Oregon Economics Department, revised 01 Feb 2002.
- Chakraborty, Shankha & Ray, Tridip, 2006. "Bank-based versus market-based financial systems: A growth-theoretic analysis," Journal of Monetary Economics, Elsevier, vol. 53(2), pages 329-350, March.
- Masahiro Inoguchi, 2007. "Influence of ADB Bond Issues and US Bonds on Asian Government Bonds ," Asian Economic Journal, East Asian Economic Association, vol. 21(4), pages 387-404, December.
- Jonathan A. Batten & Peter G. Szilagyi, 2007. "Domestic Bond Market Development: The Arirang Bond Experience in Korea," World Bank Research Observer, World Bank Group, vol. 22(2), pages 165-195, September.
- Paul Lejot & Douglas Arner & Liu Qiao, 2006. "Missing Links: Regional Reforms for Asia's Bond Markets," Asia Pacific Business Review, Taylor & Francis Journals, vol. 12(3), pages 309-331, July.
- Blommestein Hans J & Santiso Javier, 2007. "New Strategies for Emerging Domestic Sovereign Bond Markets in the Global Financial Landscape," Global Economy Journal, De Gruyter, vol. 7(2), pages 1-58, June.
- Guorong Jiang & Robert McCauley, 2004. "Asian local currency bond markets," BIS Quarterly Review, Bank for International Settlements, June.
- Barry Eichengreen & Pipat Luengnaruemitchai, 2004. "Why Dones't Asia have the biger bond markets," Working Papers 242004, Hong Kong Institute for Monetary Research.
- Jerry Dasso & Elaine Worzala, 1993. "An international real estate society?," ERES eres1993_124, European Real Estate Society (ERES).
- Camilo E. Tovar & Myriam Quispe-Agnoli, 2008. "New financing trends in Latin America : an overview of selected issues and policy challenges," Economic Review, Federal Reserve Bank of Atlanta.
- Richard J. Herring & Nathporn Chatusripitak, 2000. "The Case of the Missing Market: The Bond Market and Why It Matters for Financial Development," Center for Financial Institutions Working Papers 01-08, Wharton School Center for Financial Institutions, University of Pennsylvania.
- Julia Leung, 2006. "Developing bond markets in Asia: experience with ABF2," BIS Papers chapters, in: Bank for International Settlements (ed.), Developing corporate bond markets in Asia, volume 26, pages 74-79 Bank for International Settlements.
When requesting a correction, please mention this item's handle: RePEc:ris:adbiwp:0173. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marc Benger)
If references are entirely missing, you can add them using this form.