-PDF Download- Sovereign Default Risk And Private Sector Access To Capital In Emerging Markets EBOOK

Sovereign Default Risk and Private Sector Access to Capital in Emerging Markets

Author: Mr.Udaibir S. Das

Publisher: International Monetary Fund

Published: 2010-01-01

Total Pages: 40

ISBN-13: 1451961944

Top down spillovers of sovereign default risk can have serious consequences for the private sector in emerging markets. This paper analyzes the effects of these spillovers using firm-level data from 31 emerging market economies. We assess how sovereign risk affects corporate access to international capital markets, in the form of external credit (loans and bond issuances) and equity issuances. The study first analyzes the impact of sovereign debt crises during the 1980s and 1990s. It goes on to examine the 1993 to 2007 period, using additional measures of sovereign risk-sovereign bond spreads and sovereign ratings-as explanatory variables. Overall, we find that sovereign default risk is a crucial determinant of private sector access to capital, be it external debt or equity. We also find that crisis resolution patterns matter and that defaults towards private creditors have stronger adverse consequences than defaults to official creditors.

Managing the Sovereign-Bank Nexus

Author: Mr.Giovanni Dell'Ariccia

Publisher: International Monetary Fund

Published: 2018-09-07

Total Pages: 54

ISBN-13: 1484359623

DOWNLOAD EBOOK →

This paper reviews empirical and theoretical work on the links between banks and their governments (the bank-sovereign nexus). How significant is this nexus? What do we know about it? To what extent is it a source of concern? What is the role of policy intervention? The paper concludes with a review of recent policy proposals.

The Cost of Aggressive Sovereign Debt Policies

Author: Christoph Trebesch

Publisher: International Monetary Fund

Published: 2009-02-01

Total Pages: 37

ISBN-13: 1451871767

DOWNLOAD EBOOK →

This paper proposes a new empirical measure of cooperative versus conflictual crisis resolution following sovereign default and debt distress. The index of government coerciveness is presented as a proxy for excusable versus inexcusable default behaviour and used to evaluate the costs of default for the domestic private sector, in particular its access to international debt markets. Our findings indicate that unilateral, aggressive sovereign debt policies lead to a strong decline in corporate access to external finance (loans and bond issuance). We conclude that coercive government actions towards external creditors can have strong signalling effects with negative spillovers on domestic firms. "Good faith" debt renegotiations may be crucial to minimize the domestic costs of sovereign defaults.

Sovereign Debt Restructurings 1950-2010

Author: Mr.Udaibir S. Das

Publisher: International Monetary Fund

Published: 2012-08-01

Total Pages: 128

ISBN-13: 1475505531

DOWNLOAD EBOOK →

This paper provides a comprehensive survey of pertinent issues on sovereign debt restructurings, based on a newly constructed database. This is the first complete dataset of sovereign restructuring cases, covering the six decades from 1950–2010; it includes 186 debt exchanges with foreign banks and bondholders, and 447 bilateral debt agreements with the Paris Club. We present new stylized facts on the outcome and process of debt restructurings, including on the size of haircuts, creditor participation, and legal aspects. In addition, the paper summarizes the relevant empirical literature, analyzes recent restructuring episodes, and discusses ongoing debates on crisis resolution mechanisms, credit default swaps, and the role of collective action clauses.

Banks, Government Bonds, and Default

Author: Nicola Gennaioli

Publisher: International Monetary Fund

Published: 2014-07-08

Total Pages: 53

ISBN-13: 1498391990

DOWNLOAD EBOOK →

We analyze holdings of public bonds by over 20,000 banks in 191 countries, and the role of these bonds in 20 sovereign defaults over 1998-2012. Banks hold many public bonds (on average 9% of their assets), particularly in less financially-developed countries. During sovereign defaults, banks increase their exposure to public bonds, especially large banks and when expected bond returns are high. At the bank level, bondholdings correlate negatively with subsequent lending during sovereign defaults. This correlation is mostly due to bonds acquired in pre-default years. These findings shed light on alternative theories of the sovereign default-banking crisis nexus.

Global Waves of Debt

Author: M. Ayhan Kose

Publisher: World Bank Publications

Published: 2021-03-03

Total Pages: 403

ISBN-13: 1464815453

DOWNLOAD EBOOK →

The global economy has experienced four waves of rapid debt accumulation over the past 50 years. The first three debt waves ended with financial crises in many emerging market and developing economies. During the current wave, which started in 2010, the increase in debt in these economies has already been larger, faster, and broader-based than in the previous three waves. Current low interest rates mitigate some of the risks associated with high debt. However, emerging market and developing economies are also confronted by weak growth prospects, mounting vulnerabilities, and elevated global risks. A menu of policy options is available to reduce the likelihood that the current debt wave will end in crisis and, if crises do take place, will alleviate their impact.

Sovereign Risk and Belief-Driven Fluctuations in the Euro Area

Author: Giancarlo Corsetti

Publisher: International Monetary Fund

Published: 2013-11-06

Total Pages: 49

ISBN-13: 1475516800

DOWNLOAD EBOOK →

Sovereign risk premia in several euro area countries have risen markedly since 2008, driving up credit spreads in the private sector as well. We propose a New Keynesian model of a two-region monetary union that accounts for this “sovereign risk channel.” The model is calibrated to the euro area as of mid-2012. We show that a combination of sovereign risk in one region and strongly procyclical fiscal policy at the aggregate level exacerbates the risk of belief-driven deflationary downturns. The model provides an argument in favor of coordinated, asymmetric fiscal stances as a way to prevent selffulfilling debt crises.

Private Finance for Development

Author: Hilary Devine

Publisher: International Monetary Fund

Published: 2021-05-14

Total Pages: 161

ISBN-13: 1513571567

DOWNLOAD EBOOK →

The Covid-19 pandemic has aggravated the tension between large development needs in infrastructure and scarce public resources. To alleviate this tension and promote a strong and job-rich recovery from the crisis, Africa needs to mobilize more financing from and to the private sector.

Issuing International Sovereign Bonds

Author: Mr.Mauro Mecagni

Publisher: International Monetary Fund

Published: 2014-06-04

Total Pages: 37

ISBN-13: 1475523106

DOWNLOAD EBOOK →

This African Department Paper examines the rise in international sovereign bonds issued by African frontier economies and recommends policies for potential first-time issuers.

A General Equilibrium Model of Sovereign Default and Business Cycles

Author: Vivian Z. Yue

Publisher: International Monetary Fund

Published: 2011-07-01

Total Pages: 32

ISBN-13: 1462330452

DOWNLOAD EBOOK →

Emerging markets business cycle models treat default risk as part of an exogenous interest rate on working capital, while sovereign default models treat income fluctuations as an exogenous endowment process with ad-noc default costs. We propose instead a general equilibrium model of both sovereign default and business cycles. In the model, some imported inputs require working capital financing; default on public and private obligations occurs simultaneously. The model explains several features of cyclical dynamics around default triggers an efficiency loss as these inputs are replaced by imperfect substitutes; and default on public and private obligations occurs simultaneously. The model explains several features of cyclical dynamics around deraults, countercyclical spreads, high debt ratios, and key business cycle moments.