Copyright
© 1991 International Monetary Fund
December 1991
ISBN 9781451939972
ISSN 0258-7440
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Contents
Preface
I. Introduction and Overview
II. Recent Developments in Private Market Financing for Developing Countries
Bank Claims on Developing Countries
Terms on Long-Term Bank Credit Commitments
Bank Debt Restructurings
Debt Conversion Programs
Developments in Selected Countries
Other Developments
Secondary Market for Bank Claims
Price Developments
Institutional Market Developments
III. Restoration of Access to Voluntary Capital Market Financing
Recent Developments
The Case of an Earlier Re-Entrant
Instruments and Techniques
Bonds versus Syndicated Loans
Use of Enhancements
Collateralization
Early Redemption and Conversion Options
Hedging Techniques
Equity Issues
Summary and Conclusions
IV. Repatriation of Flight Capital
Definition and Estimation Problems
Policies and Practices Influencing the Repatriation of Flight Capital
Measures to Reverse Capital Flight
Amnesties
Capital Account Liberalization
Foreign-Currency-Denominated Domestic Instruments
Offshore Securities
Debt Conversions
V. Commercial Bank Debt of Low-Income Countries
Background
Country Circumstances
Bank Debt Restructurings by Low-Income Countries
Debt Swaps
Statistical Appendix
References
Tables
I.
1. International Lending, 1984–First Quarter 1991
2. Change in Cross-Border Bank Claims and Liabilities, 1985–First Quarter 1991
3. Change in Cross-Border Bank Claims on Developing Countries and Areas, 1985–First Quarter 1991
4. Change in Cross-Border Bank Claims on and Liabilities to Developing Countries, by Region, 1985–First Quarter 1991
5. Long-Term Bank Credit Commitments, 1984–First Quarter 1991
6. Chronology of Bank Debt Restructurings and Bank Financial Packages, 1984–August 1991
7. Debt Conversions, 1986–First Quarter 1991
II.
8. Average Terms on International Bond Issues by Selected Developing Country Borrowers
9. Credit Ratings of Selected Developing Country Borrowers
10. Secondary Market Yields on Restructured Bank Debt and Benchmark Sovereign Bonds
Appendix
A1. Change in Interbank Claims and Liabilities, 1985–First Quarter 1991
A2. Change in Claims on Nonbanks and Liabilities to Nonbanks, 1985–First Quarter 1991
A3. Long-Term Bank Credit Commitments to Developing Countries, 1984–First Quarter 1991
A4. Bank Credit Commitments by Country of Destination, 1984–First Quarter 1991
A5. External Assets of BIS Reporting Banks by Maturity and Undisbursed Credit Commitments, December 1986–June 1990
A6. Change in Claims of U.S. Banks on Developing Countries, 1985–90
A7. U.S. Banks: Developing Country Claims Relative to Capital, 1984–90
A8. Terms of Long-Term Bank Credit Commitments, 1985–April 1991
A9. Average Spreads on Bank Credit Commitments for Developing Countries, 1984–90
A10. Selected Developing Countries: Terms on Syndicated Bank Credits, 1989–May 1991
A11. Amounts of Medium- and Long-Term Bank Debt Restructured, 1985–June 1991
A12. Debt and Debt-Service Reduction in Commercial Bank Agreements, 1987–June 1991
A13. Terms of Selected Bank Debt Restructurings and Financial Packages, 1984–June 1991
A14. Terms and Conditions of Bank Debt Restructurings and Financial Packages, 1987–June 1991
A15. Financing Instruments and Options in New Money Packages and Restructurings of Bank Debt for Selected Developing Countries, 1984–June 1991
A16. Features of Selected Debt Conversion Schemes
A17. International Bond Issues by Selected Developing Country Borrowers, 1989–September 1991
Charts
I.
1. Change in International Bank Claims, 1983–First Quarter 1991
2. Selected Balance Sheet Data for U.S. Banks, 1977–90
3. Terms on International Bank Lending Commitments, 1973–90
4. Secondary Market Prices for Developing Country Loans
II.
5. Mexico: Yield Spreads on Selected Debt Instruments
6. Yields on Selected Venezuelan Debt Instruments
The following symbols have been used throughout this paper:
… to indicate that data are not available;
—to indicate that the figure is zero or less than half the final digit shown, or that the item does not exist;
–between years or months (e.g., 1991–92 or January–June) to indicate the years or months covered, including the beginning and ending years or months;
/ between years (e.g., 1991/92) to indicate a crop or fiscal (financial) year.
“Billion” means a thousand million.
Minor discrepancies between constituent figures and totals are due to rounding.
The term “country,” as used in this paper, does not in all cases refer to a territorial entity that is a state as understood by international law and practice. The term also covers some territorial entities that are not states, but for which statistical data are maintained and provided internationally on a separate and independent basis.
Preface
This study was prepared in the Exchange and Trade Relations Department of the International Monetary Fund, under the direction of Alessandro Leipold, Chief of the Debt and Program Financing Issues Division. Its authors are Mohamed A. El-Erian, Deputy Chief of the Debt and Program Financing Issues Division, and Ajai Chopra, John Clark, and Paul Mylonas, economists in the division. The study updates information and analyses on private market financing for developing countries contained in International Capital Markets: Developments and Prospects, World Economic and Financial Surveys (Washington: International Monetary Fund, May 1991). The study was completed in September 1991 and reflects developments to that time.
The work benefited from comments by staff in other departments of the Fund and by members of the Executive Board. Opinions expressed, however, are those of the authors and do not necessarily represent the views of the Fund or its Executive Directors. Staff of the Statistics Department, particularly Richard Stillson and Dennis Jones, developed and compiled data for the study based on the Fund’s international banking statistics. Louis Pauly prepared the text for publication. The authors are also grateful to Anne Jansen for excellent research assistance, and to Delrene Alvis and Ana Knowles for their valuable word processing services. David M. Cheney, of the External Relations Department, gave the manuscript a final edit and efficiently coordinated production.