Exploring the Role of Foreign Investors in Russia's Local Currency Government Bond (OFZ) Market

Exploring the Role of Foreign Investors in Russia's Local Currency Government Bond (OFZ) Market PDF

Author: Yinqiu Lu

Publisher: International Monetary Fund

Published: 2017-02-20

Total Pages: 37

ISBN-13: 1475579756

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Local currency government bonds (OFZ bonds) are an important fixed-income instrument in Russia’s financial markets. In this paper, based on granular data, we explore the development of the OFZ bond market with a focus on foreign investors. As this fixed-income market has experienced a liberalization of the domestic trading and settlement infrastructure, and weathered several episodes of market stresses since the 2008–09 global financial crisis, the role of foreign investors can be observed along with these events. What we have found is that foreign investors had influenced the market before they became an important player and since then they have contributed to the development of the market while not necessarily destabilizing it in episodes of shocks.

Exploring the Role of Foreign Investors in Russia's Local Currency Government Bond (OFZ) Market

Exploring the Role of Foreign Investors in Russia's Local Currency Government Bond (OFZ) Market PDF

Author: Yinqiu Lu

Publisher: International Monetary Fund

Published: 2017-02-10

Total Pages: 37

ISBN-13: 1475577583

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Local currency government bonds (OFZ bonds) are an important fixed-income instrument in Russia’s financial markets. In this paper, based on granular data, we explore the development of the OFZ bond market with a focus on foreign investors. As this fixed-income market has experienced a liberalization of the domestic trading and settlement infrastructure, and weathered several episodes of market stresses since the 2008–09 global financial crisis, the role of foreign investors can be observed along with these events. What we have found is that foreign investors had influenced the market before they became an important player and since then they have contributed to the development of the market while not necessarily destabilizing it in episodes of shocks.

Nonresident Capital Flows and Volatility: Evidence from Malaysia’s Local Currency Bond Market

Nonresident Capital Flows and Volatility: Evidence from Malaysia’s Local Currency Bond Market PDF

Author: Mr.David A. Grigorian

Publisher: International Monetary Fund

Published: 2019-01-25

Total Pages: 19

ISBN-13: 1484396553

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Malaysia’s local currency debt market is one of the most liquid public debt markets in the world. In recent years, the growing share of nonresident holders of debt has been a source of concern for policymakers as a reason behind exchange rate volatility. The paper provides an overview of the recent developments in the conventional debt market. It builds an empirical two-stage model to estimate the main drivers of debt capital flows to Malaysia. Finally, it uses a GARCH model to test the hypothesis that nonresident flows are behind the observed exchange rate volatility. The results suggest that the public debt market in Malaysia responds adequately to both pull and push factors and find no firm evidence that nonresident flows cause volatility in the onshore foreign exchange market.

Instruments, Investor Base, and Recent Developments in the Malaysian Government Bond Market

Instruments, Investor Base, and Recent Developments in the Malaysian Government Bond Market PDF

Author: MissYinqiu Lu

Publisher: International Monetary Fund

Published: 2018-04-26

Total Pages: 33

ISBN-13: 1484353072

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Foreign holdings of Malaysian local currency (LCY) government bonds have increased since the global financial crisis. By exploring the micro-level bank by bank and fund by fund data, we are able to shed light on the key features of the LCY government bonds including their investor base. The data suggest that to gain exposure to the Malaysian credit, holding cash bonds is generally only one part of the strategy of foreign investors and in many cases FX derivatives are involved. The availability of an efficient FX derivatives market could help to attract a wider range of foreign investors and enrich the bond market. Meanwhile, the analysis of the risk related to the foreign ownership ideally could also cover the role of derivatives. The analysis also allows us to conclude that despite the importance of foreign investors, domestic participants, as the core investor base, could help to ensure the stability and proper functioning of the bond market.

Indonesia

Indonesia PDF

Author: International Monetary Fund. Asia and Pacific Dept

Publisher: International Monetary Fund

Published: 2023-06-25

Total Pages: 28

ISBN-13:

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Indonesia: Selected Issues

Non-Resident Holdings of Domestic Debt in Nigeria: Internal or External Driven?

Non-Resident Holdings of Domestic Debt in Nigeria: Internal or External Driven? PDF

Author: Amr Hosny

Publisher: International Monetary Fund

Published: 2020-05-22

Total Pages: 21

ISBN-13: 151354537X

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Foreign holdings of domestic debt instruments in Nigeria have been increasing. Using data over 2007M1-2019M1, we show that, on average, global factors (global interest rates, oil prices) seem to carry more weight than domestic factors (treasury bills rate and domestic risk) in foreign portfolio invetsors’ decisions in Nigeria. Specifically, we show that foreign participation is, in the long run, positively correlated with oil prices and profitable rates of return on local-currency instruments, but negatively correlated with exchange rate depreciation pressures. In the short run, oil prices, opportunity cost of funds and perception of Nigeria-specific risks also play a role. These results highlight the volatile short-term nature of such flows and call for a package of policy reforms to attract longer term direct investments.

The Evolution of Public Debt Vulnerabilities In Lower Income Economies

The Evolution of Public Debt Vulnerabilities In Lower Income Economies PDF

Author: International Monetary Fund. Strategy, Policy, & Review Department

Publisher: International Monetary Fund

Published: 2020-02-10

Total Pages: 56

ISBN-13: 1513529110

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Public debt in lower-income economies (LIEs) has risen in recent years, with half of the countries covered in this report now assessed to be at high risk of or already in debt distress.

IMF Research Bulletin, Summer 2017

IMF Research Bulletin, Summer 2017 PDF

Author: International Monetary Fund. Research Dept.

Publisher: International Monetary Fund

Published: 2017-08-11

Total Pages: 19

ISBN-13: 1484315448

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The Summer 2017 issue of the IMF Research Bulletin highlights new research such as recent IMF Working Papers and Staff Discussion Notes. The Research Summaries are “Structural Reform Packages, Sequencing, and the Informal Economy (by Zsuzsa Munkacsi and Magnus Saxegaard) and “A Broken Social Contract, Not High Inequality Led to the Arab Spring” (by Shantayanan Devarajan and Elena Ianchovichina). The Q&A section features “Seven Questions on Fintech” (by Tommaso Mancini-Griffoli). The Bulletin also includes information on recommended titles from IMF Publications and the latest articles from the IMF Economic Review.

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

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

Author: Ms.Anastasia Guscina

Publisher: International Monetary Fund

Published: 2014-07-18

Total Pages: 40

ISBN-13: 1498310680

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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.

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