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Africa's sovereign debt markets are not well understood, partly due to a lack of data. This paper introduces the Africa Debt Database (ADD), the most granular and comprehensive dataset on external borrowing by African governments thus far. Our project moves beyond existing aggregate datasets and instead releases information on individual loans and bonds, in particular on the financial terms of each instrument. Taken together, we cover over 7000 loans and bonds between 2000 and 2020, with a total volume of 790 billion USD. Using this data, we study Africa's record lending boom of the 2010s in detail. The debt boom was mainly driven by large sovereign bond issuances in London and New York, as well as growing lending by Chinese state-owned banks. The micro data also reveal a large variation in lending terms across countries, time, and creditors. Sovereign external bonds have interest rates of 6 percent, on average, Chinese banks charge 3 percent, and multilateral organizations just 1 percent. Strikingly, many governments in Africa simultaneously borrow large amounts from both private and official creditors, at vastly different rates. The large differences in debt servicing costs are indicative of a cross-creditor subsidy, as cheap concessional loans can be used to pay the high interest to private or Chinese creditors. This version: April 2023

The absence of sovereign bond issuances with World Bank guarantee support for almost 15 years and the customized application of the WB guarantee instrument led potential investors in the Ghana bond to ponder the best way to value the instrument. This paper provides guidance on this subject by presenting four ways to assess the value of a World Bank guarantee for debt capital market issues. The methodologies presented are: nominal weighted average yield; rolling nominal weighted average yield; discounted cash flow; and recovery analysis. The paper presents the methodologies by applying them to a fictional bond issuance by the government of Emergistan, a fictional low income country. Background information on the country and bond issuance has been kept to the minimum as the sole purpose of this example is to illustrate the results of each of the methodologies. It should be noted that World Bank guarantees can be structured in a number of ways depending on the issuer’s objectives as well as country and market circumstances. For instance, guarantees could cover interest and/or principal payments of bonds. Coverage could be on a first loss or back-ended basis. Therefore, the most appropriate valuation method would depend on the specific features of the guarantee being considered.

Vietnam’s economy has weathered the recent turbulence in the external environment fairly well, reflecting resilient domestic demand and robust performance of export-oriented manufacturing. Growth further accelerated to 6.5 percent (year-on-year) in the first three quarters of 2015 (after coming in at 6 percent last year). Low inflation and strengthening consumer confidence supported an uptick in private consumption while investment was lifted by robust foreign direct investment, rising government capital expenditures, and a recovery of credit growth. Exports of the foreign-invested manufacturing sector also accelerated, but this was offset by a slowdown of commodity exports and a surge in imports of capital and intermediate goods, reflecting stronger investment and the high import content of manufacturing exports.

Using the universe of all externally issued bonds by corporates and sovereigns in emerging and developing economies during 2000-14, this paper analyzes various issuance trends, including the unprecedented post-crisis surge. The paper focuses on external issuance at the country-industry and individual bond levels and finds that global factors matter greatly for emerging and developing economies issuance. A decrease in U.S. expected equity market (or interest rate) volatility, U.S. corporate credit spreads, and U.S. interbank funding costs and an increase in the Federal Reserve’s balance sheet (i) raise the odds that the monthly issuance volume of a country-industry is above its historical average; (ii) decrease individual bond yields and spreads; and (iii) raise bond maturities, after controlling for country pull factors, bond characteristics (for example, type of issuer, industry, and riskiness). Additionally, we document support that the risk-taking channel of exchange rate appreciation also operates for external bond issuance. Moreover, while the paper finds that country pull factors affect the impact of global factors, it does not find consistent evidence for this across the board. This result suggests that, during loose global funding conditions, flows are mostly driven by push factors and do not systematically discriminate between emerging and developing economies. Taken together, the findings suggest that although issuers might be able to benefit from benign international funding conditions, the large issuance volumes, currency risks, and high exposure to global factors could pose external and domestic challenges for policy makers, particularly when global cycles reverse.

How many and which firms issue equity and bonds in domestic and international markets, how do these firms grow relative to non-issuing firms, and how does firm performance vary along the firm size distribution? To evaluate these questions, a new data set is constructed by matching data on firm-level capital raising activity with balance sheet data for 45,527 listed firms in 51 countries. Three main patterns emerge from the analysis. (1) Only a few large firms issue equity or bonds, and among them a small subset has raised a large proportion of the funds raised during the 1990s and 2000s. (2) Issuers grow faster than non-issuers in assets, sales, and employment, that is, firms do not simply use securities markets to adjust their financial accounts. (3) The firm size distribution of issuers evolves differently from that of non-issuers, tightening among issuers and widening among non-issuers.

The paper finds a moderate evolution in public debt ratios since debt relief among heavily indebted poor countries (HIPC) and multilateral debt relief initiative (MDRI) recipient countries in Sub-Saharan Africa, with certain exceptions. For eight countries the authors find rapid rates of debt accumulation, which can return them to pre-HIPC debt levels in only a few years. Short-term domestic debt has, despite early fears, in general not filled the borrowing space created by debt relief. However, external debt accumulation on commercial terms in some cases presages repayment spikes, which may combine with short-term domestic obligations to amplify refinancing risk and cause abrupt reductions in public spending, with damaging consequences for development. Finally, despite reduced debt, African economies continue to be commodity dependent and prone to shocks. As global interest rates and commodity prices revert to historically more customary levels, these countries should remain prudent: avoid tax-base erosion, prevent large recurrent spending hikes, and invest wisely in growth, by executing projects effectively to enhance infrastructure. These fiscal fundamentals will be as important for debt sustainability as how much is borrowed and on which terms.

The explosive growth of green bonds in the capital markets is increasingly attracting attention from investors. This surge in interest has created a demand for accessible information on the green bond market. This primer was created in response to this demand and covers the principles of this relatively new financial instrument. The following intends to serve as a guide for those interested in better understanding the nature of green bonds. The content will aim to distinguish green bonds from other traditional financial instruments. It will also provide insight into the potential of green bonds to mobilize new sources of climate finance. This paper includes the following highlights: understanding bonds (chapter one); understanding green bonds (chapter two); and benefits and potential.

Support for Enhanced Macroeconomics and Fiscal Policy Analysis (SEMEFPA), AusAID The Indonesia economic quarterly reports on and synthesizes the past three months' key developments in Indonesia's economy. It places them in a longer-term and global context, and assesses the implications of these developments and other changes in policy for the outlook for Indonesia's economic and social welfare. Its coverage ranges from the macroeconomy to financial markets to indicators of human welfare and development. It is intended for a wide audience, including policy makers, business leaders, financial market participants, and the community of analysts and professionals engaged in Indonesia's evolving economy. International developments continue to shape Indonesia's near-term economic outlook, but the focus of attention has shifted. In late 2011 the primary concern was the deteriorating and uncertain outlook for the global economy and financial markets. Since then there has been further evidence of the slowdown in global economic momentum but also some positive signs, such as from the US, and international financial market conditions have improved. The recent sharp rise in global oil prices has added a new dimension to the situation. In particular, it has increased the projected cost of Indonesia's fuel subsidies. With the benefits of these subsidies mainly going to the wealthier segments of the population, there is a clear need to redirect this spending to more pressing development needs.

This report provides an overview of the municipal debt market as it exists and has evolved over the past ten years. It provides an assessment of trends and patterns from both bank and bond sources covering all types of municipal governments. The overall objective of the work is to assess the regulatory environment pertaining to municipal borrowing in the country and to generate recommendations to improve this in a manner which expands municipal access to private debt finance while ensuring that risk is appropriately allocated and properly priced. More particularly, this report: 1) outlines the need and rationale for expanding access to credit finance on part of municipalities in India; 2) provides an overview of the existing municipal debt market; 3) provides an overview of the chief characteristics of the regulatory environment pertaining to municipal borrowing in India, places the existing regulatory system in international context, and outlines a suggested overall direction for reform; and 4) provides specific recommendations to improve the regulatory regimes over which the state and union governments have respective control.

The Philippines economy posted robust growth in early 2010, in part due to large one-off factors. As did many countries in the region, the Philippines benefited from a strong rebound in global trade. Manufacturing and investment activity expanded briskly as a result. Private consumption continued to expand, as consumer confidence improved. Growth also benefited from election-related spending. Expansionary (and now pro-cyclical) fiscal policy continued to support growth. Despite a withdrawal of liquidity-enhancing measures and a stronger peso, a closing output gap meant that monetary policy remained accommodative. A World Bank study of Philippines migration pattern during the global recession reveals that deployment of overseas foreign workers (OFWs) actually accelerated during the crisis. Partly this reflected the fact that the top OFW destinations were not as affected as the rest of the world. The most affected OFWs were males, production workers (especially construction workers) and new hires. By contrast, females, services workers, seafarers and rehires proved resilient to the crisis or even benefited from it. Globally, less tolerance towards weak public finances is expected, raising the need to introduce a credible medium-term fiscal consolidation plan for the Philippines. Running a pro-cyclical fiscal policy with relatively high debt and limited fiscal space-as undertaken in the first-half of 2010-raises risks and should be reverted. Credibility towards such a goal could be achieved, for example, by designing a comprehensive multi-year reform package. As the output gap closes, the accommodative monetary policy introduced in 2008 would need to be gradually unwound, starting by reaching a broadly neutral stance in 2010. An increase in policy rates currently negative or slightly positive could achieve such a goal.

Vietnam has navigated the global crisis better than many other countries. GDP grew by 5.3 percent in 2009, accelerating to 6.9 percent in the last quarter of the year. At 5.8 percent, the figure for the first quarter of 2010 was less impressive, but claims that growth has slowed down are most probably unwarranted. Exports declined in 2009, for the first time since the beginning of economic reforms, but their decline was smaller than in other countries of the region. By now export growth is converging back to the 30 percent annual growth rate observed before the crisis. Inflation, which had reached 19.9 percent in 2008, was down to 6.5 percent in 2009. While there were some worrying signs of inflation acceleration in late 2009 and early 2010, by now the monthly increase of the Consumer Price Index (CPI) is again moderate. And as in previous years, there were no banking crises despite the continuation of macroeconomic turbulence. More generally, lack of clarity by markets forces the government to overshoot in its policy reactions. Because markets are not sure to understand what the government is up to, they need to see very strong action in order to be convinced that the right course of action has been taken. As a result, Vietnam has had to go through dramatic shifts in the policy stance as circumstances changed. The stabilization policies of 2008 effectively 'killed' the real estate bubble and brought inflation rates to zero in just a few months, but such speed took a toll on economic activity. The stimulus policies of 2009 were equally strong and determined, but they ended up putting too much pressure on international reserves. With more information disclosure and better communication, policy shifts could perhaps be less extreme. Combined with stronger macroeconomic management, it should be possible for Vietnam to gradually free itself from the 'stop-and-go' cycle that has characterized macroeconomic policies over the last three years.