Title Page
WORLD ECONOMIC AND FINANCIAL SURVEYS
Private Market Financing for Developing Countries
Prepared by a Staff Team in the Policy Development and Review Department led by Charles Collyns
John Clark
Robert Feldman
Ahsan Mansur
Paul Mylonas
Karen Parker
Susan Prowse
Robert Rennhack
Philippe Szymczak
Louis W. Pauly
INTERNATIONAL MONETARY FUND
Washington, DC
December 1992
Copyright
© 1992 International Monetary Fund
Charts and Cover Design: IMF Graphics Section
Private market financing for developing countries / by a staff team from the Policy Development and Review Department; Charles Collyns … [et al.].
p. cm—(World economic and financial surveys)
“December 1992.”
ISBN 1-55775-318-0
ISSN 0258-7440 = World Economic and Financial Surveys
1. Loans, Foreign—Developing countries. 2. Debts, External—Developing countries. 3. Debt relief—Developing countries. 4. Debt conversion—Developing countries. I. Collyns, Charles. II. International Monetary Fund. Policy Development and Review Dept. III. Series.
HG3891.5.P75 1992 92—38191
336.3’435’091724—dc20 CIP
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Contents
Preface
I. Overview and Current Issues
Commercial Bank Debt Restructurings
New Private Financing
Recent Experience
Sustainability of Market Access
Vulnerability to Fluctuations in External Financing
II. Commercial Bank Debt Restructuring
Recent Bank Agreements
Experience with Market-Based Debt Reduction
Debt-Conversion Programs
Country Experience
Debt for Development
Secondary Market for Claims on Developing Countries
Price Trends
Institutional Developments
III. Recent Developments in Private Market Financing
Bond Issues
Short-Term Instruments
Bank Lending
Equity Portfolio Flows
International Equity Placements
Country Funds
Other Flows
Derivative Instruments
IV. Issues in Market Re-Entry
Expanding the Investor Base
The Role of Domestic Market Reforms
Increasing the Efficiency of Market Trading Systems
Regulatory Structures in Emerging Markets
Privatizations
Other Reforms
Graduation from Provisioning Requirements
Periodic Reassessment
Market Access
Passage of Time
V. External Debt Management
Comparison of 1990–92 with 1978–82
Recent Capital Flows
Economic Policies
Servicing Existing Obligations
Techniques of External Debt Management
Monitoring Public and Private Borrowing
Regulations and Other Controls on Private Capital Inflows
Balance Between Debt and Equity Flows
Annexes
I. Evaluation of Debt Exchanges
II. Stripped Prices
Tables
I.
1. Chronology of Bank Debt Restructurings and Bank Financial Packages, 1984–September 1992
2. Commercial Bank Debt and Debt-Service Reduction Operations, 1987–June 1992
3. Countries with Market Access: Debt and Debt-Service Indicators
II.
4. Bank Menu Choices in Debt Restructuring Packages
5. Buy-Back Equivalent Prices in Debt and Debt-Service Reduction Operations
6. Debt Conversions, 1986–First Quarter 1992
7. Debt-for-Development Conversions
III.
8. International Bond Issues by Developing Countries
9. International Equity Issues by Developing Country Companies
10. Issues of Closed-End Funds Targeting Developing Country Emerging Markets
IV.
11. Credit Ratings of Developing Country Borrowers
V.
12. Net External Financing
13. Foreign Capital Flows
14. Indicators of the External Position
Appendix
A1. Amounts of Medium- and Long-Term Bank Debt Restructured, 1985–September 1992
A2. Terms and Conditions of Bank Debt Restructurings and Financial Packages, 1989–September 1992
A3. Debt and Debt-Service Reduction in Commercial Bank Agreements, 1987–September 1992
A4. Debt-for-Development Conversions
A5. International Bond Issues by Selected Developing Country Borrowers, July 1991–June 1992
A6. International Bond Issues by Developing Countries, 1987–First Half 1992
A7. International Bond Issues by Developing Countries by Type of Borrower
A8. Yield Spread at Launch for Unenhanced Bond Issues by Developing Countries
A9. International Bond Issues by Developing Countries by Currency of Denomination
A10. Issues Under Euro-Medium-Term Note Programs, April 1991–June 1992
A11. International Borrowing Facilities for Developing Countries
A12. Bank Credit Commitments by Country of Destination, 1987–First Half 1992
A13. Concerted Lending: Commitments and Disbursements, 1983–July 1992
A14. Terms of Long-Term Bank Credit Commitments, 1986–May 1992
A15. Terms on Syndicated Bank Credits for Selected Developing Countries, 1989–May 1992
A16. Provisioning Regulations Against Claims on Developing Countries
A17. Gross Public-Sector Disbursements
A18. Nonfinancial Public-Sector Balances
A19. Gross National Savings and Investment
Charts
I.
1. Terms on International Bank Lending Commitments, 1973–May 1992
II.
2. Secondary Market Prices for Bank Claims During Negotiations of Bank Restructuring Packages
3. Secondary Market Prices of Bank Claims on Selected Indebted Countries
The following symbols are 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., 1992–93 or January–June) to indicate the years or months covered, including the beginning and ending years or months;
/ between years (e.g., 1992/93) 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 Policy Development and Review Department of the International Monetary Fund, under the direction of Charles Collyns, Chief of the Debt and Program Financing Issues Division. Its authors are John Clark, Robert Feldman, Ahsan Mansur, Paul Mylonas, Karen Parker, Susan Prowse, Robert Rennhack, and Philippe Szymczak, economists in the Division. The study updates information and analyses contained in Private Market Financing for Developing Countries, World Economic and Financial Surveys (Washington: IMF, December 1991). The study was completed in September 1992 and reflects developments to that time.
Background for the study was provided in part by informal discussions with commercial and investment banks and regulatory and monetary authorities in Frankfurt, London, New York, and Paris in May–June 1992. The work benefited from comments by staff in other departments of the IMF and by members of the Executive Board. Opinions expressed, however, are those of the authors and do not necessarily represent the views of the IMF or its Executive Directors.
Louis Pauly prepared the text for publication. The authors are also grateful to Anne Jansen for excellent research assistance, and to Delrene Alvis, Ana Knowles, and Lucia Smillo for their valuable word processing services. David M. Cheney, of the External Relations Department, gave the manuscript a final editing and coordinated production.