The Rise of Domestic Capital Markets for Corporate Financing

Abraham, Facundo; Lorente, Juan Jose Cortina; Schmukler, Sergio L.

doi:10.1596/1813-9450-8844

Cited by 7 publications

(7 citation statements)

References 45 publications

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“…Rising leverage is not dangerous per se. Increasing leverage associated with more bond financing might improve emerging market resilience to financial shocks as firms gain access to more complete markets (Abraham et al, 2019). Moreover, increasing leverage could be a sign of lower financing constraints and that firms can undertake profitable investments to grow.…”

Section: Solvency Riskmentioning

confidence: 99%

“…In other emerging regions, the relative share of domestic corporate bond issuances also increased after the GFC, but most of the issuances still took place in foreign markets ( Figure 5). Because of the high correlation between issuance market and currency denomination, this trend implies a rise in the share of domestic currency bond financing among emerging economies (Abraham et al, 2019). Moreover, the share of domestic currency bonds increased even within international (cross-border) issuances.…”

Section: Currency Riskmentioning

confidence: 99%

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Growth of Global Corporate Debt : Main Facts and Policy Challenges

Abraham¹,

Cortina²,

Schmukler³

2020

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The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

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Section: Solvency Riskmentioning

confidence: 99%

Section: Currency Riskmentioning

confidence: 99%

Growth of Global Corporate Debt : Main Facts and Policy Challenges

Abraham¹,

Cortina²,

Schmukler³

2020

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“…The wider use of international capital markets by emerging market firms could have occurred at the expense of domestic markets: for example, if firms from emerging markets were conducting their investing and capital-raising activities directly in international markets, which are already well established. A new paper (Abraham, Cortina, and Schmukler 2019) examines whether this is the case by studying the performance of domestic capital markets in East Asia since in the 1990s. Focusing on East Asia is important because the region accounts for the bulk (about 70%) of the capitalraising activity in emerging economies.…”

Section: Box 2: the Growing Importance Of Domestic Capital Marketsmentioning

confidence: 99%

“…continued on next page GDP = gross domestic product. Source: Abraham, Cortina, and Schmukler (2019).…”

Section: Box 2: the Growing Importance Of Domestic Capital Marketsmentioning

confidence: 99%

Asia Bond Monitor:

2019

Asia Bond Monitor

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• Local currency government bond yields edged lower in most emerging East Asian markets between 1 June and 15 August amid a weakening global growth outlook, easing monetary stances, and heightened investor risk aversion. 1 • The trade dispute between the People's Republic of China (PRC) and the United States (US) continued to weigh on global growth. In response, many central banks in advanced economies and the region eased their respective monetary policy stance. • Equity markets declined, risk premiums widened, and regional currencies weakened vis-à-vis the US dollar during the review period, as slowing global growth and looming uncertainties soured investor sentiment. • The size of emerging East Asia's local currency bond market reached USD15.3 trillion at the end of June, posting quarter-on-quarter growth of 3.5% and yearon-year growth of 14.2%. • In August, Advanced Bank of Asia, a Cambodia-based bank, marked the third company to list its bonds on the Cambodia Securities Exchange. The 3-year bonds had an issuance size of KHR84.8 billion and carried a coupon rate of 7.75%. Risks to Financial Stability • The persistence of PRC-US trade tensions remains the biggest threat to the region's economic outlook and financial stability. • Other downside risks include a faster-than-expected slowdown in the PRC economy, a budding trade conflict between Japan and the Republic of Korea, and global investors' risk aversion toward emerging markets.

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“…Corporate bond financing has typically grown faster than bank credit during the same period(Abraham et al, 2019).…”

mentioning

confidence: 99%