Chapter

III Recent Developments in Private Market Financing

Author(s):
International Monetary Fund
Published Date:
September 1995
Share
  • ShareShare
Show Summary Details

Developing countries experienced a dramatic increase in capital inflows during the 1990s, following a slowdown in economic activity in the industrial countries and a decline in interest rates, particularly in the United States. Net capital flows to these countries as a group rose from an annual average of $28 billion in 1982-89 to a peak of $169 billion in 1993 (Chart 3).14 This increase occurred mainly because of a sharp rise in private capital flows, which shifted from outflows averaging $3 billion a year in 1982-89 to peak inflows of $149 billion in 1993, A marked increase in net foreign direct investment flows accounted for a large portion of these private inflows (Chart 4). However, the most significant development was the rapid growth of net portfolio (bond and equity) flows, which became an important source of financing for a number of major developing countries. In contrast, other net private capital flows (including bank loans) remained modest, although the pace of bank loan commitments picked up significantly in 1994.

Chart 3.Net Capital Flows to Developing Countries

(In billions of U.S. dollars)

Source: IMF, World Economic Outlook database.

1Flows exclude exceptional financing. Capital-exporting countries such as Kuwait and Saudi Arabia are excluded.

Chart 4.Net Private Capital Flows to Developing Countries1

(In billions of U.S. dollars)

Source: IMF, World Economic Outlook database.

1Flows exclude exceptional financing. Capital-exporting countries such as Kuwait and Saudi Arabia are excluded.

There has been a marked change in the regional distribution of private capital flows to developing countries in recent years. Major Western Hemisphere countries significantly improved their access to private market financing, while Asian countries continued to attract a large portion of flows. Flows to other regions also rose, but the levels remained modest. The composition of capital flows varied among regions: in Asia, inflows predominantly took the form of foreign direct investment; in the Western Hemisphere, in contrast, a large portion of inflows was accounted for by portfolio investments.

The external environment for developing country financing began to change in 1994 as economic recovery in the industrial countries strengthened. In particular, a tightening of monetary policy in the United States in early 1994 caused turbulence in international capital markets, significantly affecting portfolio capital flows to developing countries. In 1994, net capital flows to developing countries declined to an estimated $119 billion. Much of the decline was accounted for by portfolio flows, which fell to $62 billion. In contrast, commercial bank lending picked up, and foreign direct investment flows continued to grow, although at a slower pace. The decline in capital inflows was concentrated in the Western Hemisphere; inflows to Asia were virtually unchanged.

The devaluation of the Mexican peso in December 1994 adversely affected investor confidence, resulting in a substantial further slowdown in capital inflows to developing countries in the first half of 1995. Bond and equity issuance by developing countries in international capital markets declined significantly, with only developing country entities with the best credit ratings maintaining market access. There was a widespread sell-off of developing country securities in the early months of the year, and stock prices in developing country markets fell sharply (Chart 5). Although selling pressures were concentrated in Western Hemisphere markets, they temporarily spilled over to Asian markets. As prospects for the Mexican economy and other Latin American countries improved, however, renewed interest in developing country securities by foreign investors emerged in March 1995, and securities prices in these markets generally recovered through June.

Chart 5.U.S. Dollar Share Price Indices

(IFC weekly Investable Price Indices, December 1988 = 100)

Source: International Finance Corporation (IFC), Emerging Markets Data Base.

The recent experience with private capital flows to developing countries underscores the importance of a recipient country’s macroeconomic policies in determining its access to private market financing. The market turbulence triggered by the Mexican crisis indicated that, in general, developing countries that have consistently adhered to sound macroeconomic policies, such as the Asian economies, were able to maintain access to international capital markets on reasonable terms. Similarly, concerted efforts to implement economic policy adjustment programs in the transition economies of Europe and in the Latin American countries that encountered difficulties have been rewarded by a resumption of market access in most cases.

However, appropriate macroeconomic policies alone may not be sufficient for developing countries to attract significant private capital inflows. A broad range of structural reforms also needs to be implemented to create attractive investment opportunities. Equity flows, in particular, depend on development of the corporate sector and on a favorable business climate. As part of this climate, firms need assured access to foreign currency for imported inputs and the freedom to remit dividends and profits and to repatriate capital. For countries facing debt-servicing problems, the normalization of their relationships with creditors has played an important role in regaining access to capital inflows. A well-established and clear legal and regulatory framework, a transparent and nondistortionary taxation system, a stable domestic financial system, and adequate infrastructure (including transportation and telecommunications) are also important factors. In Asia and many Western Hemisphere countries, well-established corporate sectors, together with extensive privatization programs, have provided attractive investment opportunities. As indicated in Chart 6, there appears to be a direct relationship between the magnitude of private inflows in relation to GDP and per capita income levels. This may reflect the state of development of the corporate sector.

Chart 6.Net Foreign Direct Investment and Portfolio Flows and Per Capita Income

Source: IMF, World Economic Outlook database.

Other important factors also influence private capital inflows, including political stability, human capital development, natural resource endowments, and a country’s geographical proximity to major markets. The last factor appears to play an increasingly important role in determining direct investment flows because multinational corporations seeking cost and geographical advantages have increased the international integration of production.

Bonds

Bond issuance in international capital markets has become a major avenue for developing countries’ external financing. Despite the turbulent market conditions early in 1994 and toward the end of the year, developing countries raised $58.4 billion through international bond placements (Table 5). Although this represented a small decline from levels a year earlier, the number of countries issuing bonds increased from 25 in 1993 to 37 in 1994.

Table 5.International Bond Issues by Developing Countries and Regions1(In millions of U.S. dollars)
19941995
1991199219931994Q1Q2Q3Q4Q1Q2
Developing countries14,03124,39462,67158,38818,2348,97615,72715,4515,33314,351
Africa3117241702,7161,471320925408589
Congo600600
Liberia170
South Africa3117241,838593320925158415
Tunisia278278251174
Asia4,0725,90821,99829,8978,0296,1899,4466,2344,1335,442
China2581,3552,8523,6521,500596888668154
Hong Kong1364627,4726,7961,9131,2111,8071,866629803
India227556891439202250
Indonesia3933645102,24667975071710020222
Korea2,5603,0885,9626,4831,2361,3012,2511,6952,9943,084
Macao155155
Malaysia1909582,345330735580700175
Pakistan19545150
Philippines201,2741,307154335345473250
Singapore633366527248
Taiwan Province of China22960781,96431656189619171180
Thailand175592,3353,5271,4622321,442391265680
Europe2,0774,8299,6583,5431,0574399211,1272542,029
Czech Republic694400250150
Former Czechoslovakia276129
Hungary1,2351,4854,8011,729711896688022541,524
Malta205205
Poland250
Russia7575
Slovak Republic24027521254
Turkey5663,2153,92286076099255
Middle East4002,0522,9931,0001,243750
Israel4002,0522,3131,000563750
Lebanon400400
Saudi Arabia280280
Western Hemisphere7,17012,93328,79419,2386,6772,3493,7966,4165386,291
Argentina7651,6196,3085,3191,4609008792,0801,594
Barbados502030
Bolivia1010
Brazil1,8373,6956,4653,9981,145605952,1981173,354
Chile200120322155155
Colombia56795525083300322100310
Costa Rica5050
Guatemala60
Jamaica5555
Mexico3,7066,33311,3386,9493,6221,2461,393688321808
Panama851,248250998225
Peru30100404020
Trinidad and Tobago100125150150
Uruguay100140200100100
Venezuela5779663,438
Total bond issues in international bond markets314,343350,537500,135462,447136,043100,700114,310111,394112,416119,504
In percent
Shares of developing countries in global issuance4.57.012.512.613.48.913.813.94.712.0
Sources: Euromoney database; Financial Times; and International Financing Review.

Including note issues under Euro medium-term notes (EMTN) programs. Data prior to 1994 have been revised.

Sources: Euromoney database; Financial Times; and International Financing Review.

Including note issues under Euro medium-term notes (EMTN) programs. Data prior to 1994 have been revised.

During 1994, bond issuance activity by developing countries fluctuated considerably. In the wake of a tightening of monetary policy in the United States in February 1994, the pace of bond issuance slowed markedly. As stability returned to bond markets in May, bond placement picked up and became buoyant in September and October. However, this revival in issuing activity proved to be short lived, with placements falling off considerably beginning in the period immediately preceding the devaluation of the Mexican peso in mid-December 1994.

The Mexican devaluation prompted a more severe and prolonged reversal in investor confidence than was seen in the early part of 1994. This was manifested not only in sharp declines in the number and value of new issues, but also in a considerable reduction in the number of countries placing issues. From late December 1994 through most of January 1995, international bond issuance by developing countries came to a virtual halt, with many planned issues withdrawn in response to the deterioration in market conditions. In February 1995, new issues began to recover, although placements generally were limited to borrowers with favorable credit ratings. Asian borrowers dominated the market. In the first quarter of 1995, there were only 41 new issues from 12 developing countries, which raised a total of $6.3 billion. During that period, developing country bond issues ac-counted for only 4.7 percent of the value of all bond issues in international markets, compared with an average of 12.6 percent in 1994. The pace of issuance and access to the market gradually recovered in the second quarter of 1995, when 95 issues by 18 countries raised a total of $13.4 billion.

Marked changes in the pattern of issuance by developing countries were seen in 1994. Private sector issues continued to gain a larger share of the market, accounting for 57 percent, compared with 47 percent in 1993 (see the Statistical Appendix, Table A5). However, there was a significant reversal in this pattern in the first half of 1995, with a resurgence in sovereign issues led by Brazil, Hungary, and Turkey.

A significant portion of bonds has been issued by financial institutions in developing countries in recent years. This pattern became stronger in the first half of 1995, with the share of the financial sector in total bond placements by developing countries rising to over 59 percent, compared with an average of 45 percent in 1991-94 (see the Statistical Appendix, Table A6). Within the financial sector, banks were the largest borrowers. This development was particularly notable for some Asian and Western Hemisphere countries, such as Brazil, Korea, Mexico, and Thailand.

The terms for new bond issues by developing countries deteriorated during the course of 1994. The average maturity for new bond issues, which had lengthened from 4 years in 1991 to reach a peak of 7.3 years in the final quarter of 1993, declined to around 5 years by the end of 1994 (Chart 7; see also Statistical Appendix, Table A7).15 This shortening of average maturities was experienced, to varying degrees, across all regions and types of borrowers. Private sector borrowers and borrowers from Asian countries generally suffered less marked reductions in average maturities. In the first quarter of 1995, when more creditworthy Asian borrowers dominated the market, the decline in average maturities stopped. In the second quarter, when other borrowers re-entered the market, average maturities declined sharply to 3¾ years, reflecting the return of financial sector borrowers from Western Hemisphere countries to the market with a number of issues carrying maturities of 1 to 3 years.

Chart 7.Terms at Launch for Unenhanced Bond Issues by Developing Countries

Source: IMF staff estimates based on Euromoney database.

The weighted-average yield spread for U.S. dollar-denominated bonds issued by developing countries declined from 283 basis points in 1993 to 210 basis points in 1994,16 in part because Asian issuers (who generally attracted lower yield spreads) accounted for a larger share of the total (see the Statistical Appendix, Table A8).17 However, the weighted-average spread tended to increase during the course of 1994, with Western Hemisphere borrowers in particular facing higher spreads after the setback in bond markets in February 1994. In the first quarter of 1995, when issuance was heavily concentrated among developing countries with lower credit risk (including Korean entities, which experienced significant reductions in yield spreads on their issues), the weighted-average spread declined sharply to a low of 68 basis points. A resumption of issues by a broader range of borrowers brought a widening of the average spread to 248 basis points in the second quarter of 1995.

A clearer indication of the deterioration in market conditions following the devaluation of the Mexican peso in December 1994 is reflected in movements in the yield spreads and prices for existing issues. Secondary market yield spreads for Eurobonds issued by major Latin American borrowers widened sharply, while total returns on these bonds fell precipitously (Chart 8). For instance, the spread on Mexican issues rose from about 110 basis points in early December 1994 to a peak of over 1,000 basis points in March 1995. Although other major Latin American issuers saw less dramatic changes, all of them experienced a sharp rise in yield spreads through March 1995. By the end of June 1995, yield spreads had fallen for major Latin American borrowers but were still significantly higher than the levels recorded in early December 1994. Yield spreads for most borrowers outside the Western Hemisphere rose less dramatically following the events in Mexico; for instance, by end-June 1996, yield spreads for the Czech Rupublic and Hungary were only slightly higher than the levels recorded in early December 1994.

Chart 8.Secondary Market Yield Spreads on U.S. Dollar-Denominated Eurobonds by Selected Developing Countries

(In basis points)

Source: Reuters.

After the turbulence in international bond markets in February 1994, heightened uncertainties about the future course of interest rates were reflected in a sharp increase in floating-rate issues. The share of floating-rate issues increased from 5 percent of the value of total issues by developing countries in 1993 to 21 percent in 1994, and to about 32 percent in the first half of 1995 (see the Statistical Appendix, Table A9). This trend was most evident in Asia, with floating-rate notes reaching 59 percent of all issues by Asian borrowers in the second quarter of 1995.

Greater use of enhancements (such as bond-equity conversion options, collateralization, guarantees, and put options) was also indicative of the tightening of market conditions. The proportion of total bond issues with enhancements rose from 28 percent in 1993 to 42 percent in 1994. However, this proportion declined in the first half of 1995, in part because of the rising share of large sovereign issues. The increase in use of put options in 1994 was especially notable, reflecting increased uncertainty about the future course of interest rates. Although an increasing number of borrowers, especially those in Asia, have used bond-equity conversion options in recent years, the sharp decline in stock prices in the first half of 1994 led to a large fall in the use of such options during the second half of 1994 and the first half of 1995. The use of other types of enhancements has remained modest.

In 1994, the shares of total developing country bond issues denominated in U.S. dollars and Japanese yen were virtually unchanged at 75 percent and 14 percent, respectively (see the Statistical Appendix, Table A10). Issues denominated in deutsche mark continued to decline to less than 3 percent of total developing country issues in 1994, down from a peak of 12 percent in 1991. In contrast, the share of issues denominated in Swiss francs and Hong Kong dollars increased to 2 and 3 percent, respectively. The number of currencies in which developing countries issued bonds also increased, from 8 in 1992 to 13 in 1993 and to 15 in 1994. In the first hair of 1995, the distribution of issues across currencies changed markedly. The share of issues denominated in yen and deutsche mark increased to 25 percent and 6 percent, respectively, while the share of dollar-denominated issues declined to below 63 percent for the first time. These changes in the currency composition of issues were closely related to sovereign borrowing. In the first half of 1995, 51 percent of sovereign issues were denominated in yen (compared with an average of 26 percent of sovereign issues in 1994), while the proportion of private sector issues denominated in yen remained at under 4 percent.18

Asia surpassed the Western Hemisphere as the largest borrowing region in 1994, increasing issuance by 36 percent to $30 billion, or 51 percent of the total value of issues by developing countries. Almost all borrowing countries in Asia stepped up their bond placements in 1994. An exception was Hong Kong, which reduced issuance from $7.5 billion to $6.8 billion in 1994, although it remained the largest borrower in Asia. Private companies, mainly in the financial services and real estate industries, accounted for over 90 percent of issues from Hong Kong. Korea was the second-largest bond issuer in the region, raising $6.5 billion in 1994, compared with $6 billion in the previous year. About 70 percent of these issues were placed by public banking institutions, including the Korean Development Bank. Private banks and electronics and steel companies were other major Korean issuers. Placements of bonds by China increased from $2.9 billion in 1993 to $3.7 billion in 1994, although the country’s recourse to the international bond market slowed significantly after a $1 billion global sovereign issue was launched at the beginning of 1994. Indonesia, Malaysia, Thailand, and Taiwan Province of China sharply increased their borrowing on international bond markets in 1994, led by private sector borrowers. In December 1994, Pakistan launched its first sovereign issue, priced at a spread of 385 basis points.

Faced with a deterioration in market conditions, international bond issuance by most Asian countries fell dramatically in the first half of 1995. Korea was an exception, emerging as the largest borrower in the market, led by issues by public banking institutions. The decline in bond issuance was especially notable for China, which issued only $154 million in the first quarter; Chinese entities have remained on the sidelines since the Bank of China’s credit rating and the ratings of other public sector financial institutions were downgraded by a major U.S. rating agency in April.

Total issuance by Western Hemisphere developing countries declined by a third, to $19.2 billion in 1994, or 33 percent of the total bond issues by developing countries. Barbados, Bolivia, and Costa Rica tapped the international market for the first time in the first half of 1994, and private financial institutions in Panama stepped up their borrowing after an absence of two years, including a Euroyen issue equivalent to $1 billion in the final quarter of 1994. However, major borrowers in the region reduced their recourse to bond borrowing. Mexico was still the largest borrower in 1994, although a slowdown in the pace of issuance after the first quarter of 1994 resulted in a decline in the country’s bond issuance, from $11.3 billion in 1993 to about $7 billion in 1994. Argentina raised $5.3 billion in 1994, compared with $6.3 billion in 1993. Argentina, which emerged as the second-largest sovereign issuer (behind Hungary) in 1994, launched 11 sovereign issues during the year in 8 different currency markets, including Austrian schillings, French francs, and Spanish pesetas. Brazilian borrowers sharply reduced their recourse to international bond markets, from $6.5 billion in 1993 to $4 billion in 1994. Much of this decline reflected smaller public sector placements, with private sector issues—especially from the banking sector—rising sharply at the end of the year.

After a hiatus in January 1995, Western Hemisphere countries have gradually returned to international bond markets; their total issuance amounted to $6.8 billion in the first half of 1995. A five-year $100 million sovereign issue by Colombia in early February, which was priced at a spread of over 180 basis points, was the first issue from the Western Hemisphere since the devaluation of the Mexican peso. In mid-February, PEMEX raised $137 million through a 6½-year note guaranteed by the U.S. Export-Import Bank, which marked Mexico’s, return to the market. Subsequently, a number of Mexican public financial institutions have tapped the bond market, raising $0.7 billion through four issues carrying spreads of 300-650 basis points. Placements by Brazilian entities picked up strongly in the second quarter of 1995, raising almost $3.5 billion in the period. This upturn reflected sovereign issues by Brazil, including a two-year Euroyen issue equivalent to $0.9 billion in May and a three-year deutsche mark offering equivalent to $0.7 billion in June. Brazilian private banks also stepped up bond borrowing, with the average maturities on these issues declining from three years in 1994 to about one year in the first half of 1995. In April 1995, Argentina placed a $1.0 billion sovereign bond issue with international banks that have operations in the country, and the private telecommunications company launched a small Italian lira issue in June.

European developing countries recorded the sharpest decline among the five regions in 1994, with issues falling by almost two thirds, to $3.5 billion. The decline continued in the first half of 1995, with only eight issues (totaling $2.3 billion) launched. Turkey’s access to international bond markets was curtailed after the first quarter of 1994, when yen-denominated sovereign issues raised $0.7 billion. Issues totaling $99 million by a private bank in November 1994 marked the country’s return to the market, before a sovereign issue of floating-rate notes with maturities of one to three years raised $255 million in April 1995. Despite a sharp decline in its total issuance, from $4.8 billion in 1993 to $1.7 billion in 1994, Hungary was again the largest sovereign borrower in 1994, with II issues denominated in 7 currencies. In the first half of 1995, Hungary raised $ 1.8 billion. The country has relied heavily on Samurai bond issues, which accounted for a third of the country’s total bonds issued in 1994 and three fourths of the total in the first half of 1995. Bond issues by the Czech Republic declined from $0.7 billion in 1993 to $0.4 billion in 1994, reflecting a cessation of sovereign issues. In November 1994, the country’s publicly owned utility company became the first East European corporation to enter the Eurobond market; the yield spread on this issue was 110 basis points, substantially below the yield spreads on issues by entities from other economies in transition. The Slovak Republic tapped the Samurai market with a sovereign issue equivalent to $254 million in July 1994. An issue of $75 million in October 1994 was the first placement by a Russian borrower; however, this was guaranteed by the London affiliate of the Moscow Narodny Bank.

South Africa and Tunisia were the dominant borrowers in Africa; indeed, since the second quarter of 1994 they have been the only countries in the region to tap the international bond markets. A small number of large issues by private borrowers from South Africa were launched in 1994, raising a total of almost $1.1 billion, before the Government of South Africa launched its first global bond of $750 million in December 1994. The Central Bank of Tunisia placed a five-year Samurai issue equivalent to $251 million in February 1995, the first sovereign issue for the country. In the first half of 1995, there were five issues for Africa. South Africa placed three issues totaling $573 million, including the first Samurai issue by the Government equivalent to $346 million. The Central Bank of Tunisia placed two five-year Samurai issues, raising $425 million.

Middle Eastern countries raised a total of $3,0 billion in 1994, all of which were sovereign issues. Israel issued bonds guaranteed by the U.S. Government totaling $2.3 billion in the first and third quarters of 1994. In September 1994, Lebanon entered the international market for the first time through a $400 million sovereign issue priced at a spread of 325 basis points. Saudi Arabia raised $280 million in August 1994 through a five-year bond carrying a spread of 25 basis points, the country’s first international bond issue since 1984. Middle Eastern borrowers were absent from the bond market during the first half of 1995.

There have been several changes in credit ratings for developing countries in 1994 and the first half of 1995. A number of investment-grade countries, including the Czech Republic, Indonesia, Korea, Malaysia, Singapore, and Thailand received upgraded ratings, while Brazil, India, and the Philippines received higher sub-investment-grade ratings (Table 6). Initial investment-grade ratings were given to Israel, Poland, the Slovak Republic, South Africa, and Tunisia by at least one of the major U.S. rating agencies. Barbados, Pakistan, and Uruguay received initial sub-investment-grade ratings from the major U.S. credit rating agencies. Owing to weakening economic conditions, ratings for Turkey and Venezuela were downgraded in January 1994 and in June 1994, respectively. In February 1995, a major U.S. rating agency downgraded the rating of Mexico.

Table 6.Credit Ratings of Developing Country Borrowers1
Moody’s RatingS&P RatingRecent Changes
SingaporeAa2AAAS&P upgraded its rating from AA+ in February 1995; Moody’s upgraded its rating from Aa3 in May 1994
Taiwan Province of ChinaAa3AA+Moody’s assigned an Aa3 rating in March 1994
KoreaA1AA-S&P revised its rating from A+ in April 1995
MalaysiaA1A+S&P upgraded its rating from A in December 1994; Moody’s upgraded its rating from A2 in March 1995
ThailandA2AS&P upgraded its rating from A- in December 1994
Hong KongA3A
ChinaA3BBBS&P assigned its BBB rating in February 1992; Moody’s assigned its A3 rating in September 1993
ChileBaalBBB+S&P upgraded its rating from BBB in December 1993; Moody’s upgraded from Baa2 in June 1995
IsraelBaalBBB+S&P assigned a formal rating in January 1995
Czech RepublicBaa2BBB+Moody’s upgraded its rating from Baa3 in May 1994
IndonesiaBaa3BBBS&P upgraded its rating from BBB- in April 1995
IndiaBaa3BB+Moody’s upgraded its rating from Ba2 in November 1994
South AfricaBaa3BBSplit ratings given: Moody’s assigned an investment-grade rating. S&P a non-investment-grade rating, in September 1994
Slovak RepublicBaa3BB+Moody’s assigned a first-time rating in 1995; S&P upgraded its rating from BB- in April 1995
PolandBaa3BBS&P and Moody’s assigned first-time ratings in June 1995, with S&P indicating a positive outlook
TunisiaBaa3Moody’s assigned a first-time rating in April 1995
ColombiaBa1BBB-S&P revised outlook on Colombia to positive from stable in September 1994; Moody’s placed Colombia under review for a possible upgrade in June 1995
HungaryBa1BB+S&P revised outlook from stable to negative in February 1995
UruguayBa1BB+Moody’s and S&P assigned ratings in October 1993 and February 1994, respectively
BarbadosBa2Moody’s assigned a first-time rating in December 1994
Trinidad and TobagoBa2Moody’s assigned a first-time rating in February 1993
MexicoBa2BBS&P downgraded its rating from BB+ in February 1995
Par and discount bondsBa3BB
PhilippinesBa2BBMoody’s upgraded its rating from Ba3 in May 1994; S&P upgraded its rating from BB- in June 1995
VenezuelaBa2B+Moody’s downgraded its ratings in April 1994; S&P downgraded its rating in July 1994 from BB-
Conversion bondsBa2
Par and discount bondsBa3
PakistanBa3B+Moody’s and S&P assigned first-time ratings in November 1994
TurkeyBa3B+S&P and Moody’s downgraded their ratings below investment grade in April 1994 and June 1994, respectively
ArgentinaB1BB-S&P assigned a first-time rating in August 1993
Par discounts and bondsB2BB-
BrazilB1BS&P assigned a first-time rating in November 1994; Moody’s upgraded its rating from B2 in November 1994
Sources: Financial Times; International Financing Review; Salomon Brothers; Institutional Investor, and Euroweek.

Ranked in descending order according to ratings by Moody’s and Standard and Poor’s Investor Services. The ratings are ranked from highest to lowest as follows:

Moody’sS&P
Investment gradeAaa, Aa, A, BaaAAA, AA+, AA, AA-, A+, A, A-, BBB+, BBB, BBB-
Noninvestment gradeBa, BBB+, BB, BB-, B+, B, B-
Default gradeCaa, Ca, C, DCCC+, CCC, CCC-, CC, C

In addition, numbers from 1 (highest) to 3 are often attached to differentiate borrowers within a given grade.

Sources: Financial Times; International Financing Review; Salomon Brothers; Institutional Investor, and Euroweek.

Ranked in descending order according to ratings by Moody’s and Standard and Poor’s Investor Services. The ratings are ranked from highest to lowest as follows:

Moody’sS&P
Investment gradeAaa, Aa, A, BaaAAA, AA+, AA, AA-, A+, A, A-, BBB+, BBB, BBB-
Noninvestment gradeBa, BBB+, BB, BB-, B+, B, B-
Default gradeCaa, Ca, C, DCCC+, CCC, CCC-, CC, C

In addition, numbers from 1 (highest) to 3 are often attached to differentiate borrowers within a given grade.

Amortization payments on bonds issued by developing countries were relatively small during the period 1990-94, averaging $5.7 billion a year (Statistical Appendix, Table A11). As of end-June 1995, the total outstanding stock of international bonds issued by developing countries is estimated at about $200 billion. The bulk of these bonds carry maturities averaging four to five years. Amortization payments on this stock of debt are projected to increase sharply to $19 billion in 1995 and to reach a peak of $30 billion in 1998 (Chart 9).19 The value of maturing bonds over this period is especially large for Mexico, Brazil, Korea, Turkey, China, and Hungary; redemptions for these countries are estimated to be over $66 billion, or 67 percent of the total amount for all developing countries falling due during 1995-98.

Chart 9.Bond Redemptions by Developing Countries1

(In billions of U.S. dollars)

Sources: Euromoney database; Financial Times, and International Financing Review.

The recent appreciation of the Japanese yen against the U.S. dollar, and to a lesser extent that of the deutsche mark, have significantly increased the debt-service burden in U.S. dollar terms for some countries. In the absence of a formal mechanism to hedge foreign exchange risk (such as currency swap arrangements), the recent appreciation of these two currencies is estimated to increase bond amortization payments by $2.7 billion for China, $2.4 billion for Korea, $1.7 billion for Turkey, and $1.6 billion for Hungary over the period 1995-98. A significant portion of bonds denominated in yen and deutsche mark was issued by the financial sectors in these countries.

Equities

In contrast to bonds, equity placements by developing countries in international capital markets increased by more than 50 percent to $18 billion in 1994, with their share in total international equity placements rising slightly to almost 37 percent (Table 7). However, the pace of such placements slowed down significantly toward the end of the year following buoyant activity in September and October, when stock prices in developing country markets reached record highs. U.S. dollar-denominated equity-based instruments, such as American depository receipts (ADRs) and global depository receipts (GDRs). have been dominant instruments for developing country placements in international equity markets, accounting for 78 percent of the value of total developing country equity issues in 1994, compared with 62 percent in 1993.20

Table 7.International Equity Issues by Developing Countries and Regions1(In millions of U.S. dollars unless otherwise noted)
19941995
1991199219931994Q1Q2Q3Q4Q1Q2
Developing countries5,5747,33511,91518,1363,8263,6774,7035,9306222,712
Africa14315421557453935125
Ghana398398
Liberia207
Morocco8
South Africa14315417614135125
Asia9522,9145,15612,1302,1201,8873,3504,7736091,887
Bangladesh197
China126891,9012,5944372504911,416517
Hong Kong27123083732013314541169
India2403403,0291,18042469672813886
Indonesia1171192991,359124152011,019150
Korea2001503281,168150208210600150270
Malaysia38553
Pakistan51,18320918245
Philippines7733312694714213925840942361
Singapore1842835643013519075311
Sri Lanka3333
Taiwan Province of China47635437220218110
Thailand91472575949823238133
Europe81211866403301456310214183
Czech Republic101032
Estonia77
Hungary8121820013863
Poland114
Romania11
Russia4848
Slovak Republic113
Turkey1783753304538
Middle East5062813368932849
Israel5062813368932849
Western Hemisphere3,8913,9646,0224,7041,3431,0991,290971430
Argentina3603922,655735194380161
Brazil1331,02830061611159
Chile1292887999697279327
Colombia98207856853
Mexico3,5313,0772,9131,679753454276196
Panama88100100371
Peru261338251
Uruguay2323
Venezuela14642
Memorandum
Total equity issues in international equity market18,31519,37934,03649,20212,31017,3038,12111,4684,21012,356
Share of developing countries in global issuance (in percent)30.437.935.036.931.121.357.951.714.822.0
ADR/GDR issues by developing countries24,1905,0847,38914,1443,0362,5904,0334,4843971,255
In percent of developing countries’ total equity issuance75.269.362.078.079.470.485.875.663.846.3
Source: IMF staff estimates based on Euromoney database.

Data prior to 1994 were significantly revised.

American deposit receipts (ADRs); global deposit receipts (GDRs).

Source: IMF staff estimates based on Euromoney database.

Data prior to 1994 were significantly revised.

American deposit receipts (ADRs); global deposit receipts (GDRs).

In the wake of the Mexican financial crisis, equity issuance by developing countries came to a virtual halt in early 1995; at the same time, stock prices in these countries plummeted, especially in Latin American markets. With a bottoming out and subsequent rally in stock prices in developing countries, international equity placements began to recover in March 1995. However, the recovery was short lived, with equity placements dropping off again in May and June. In the first half of 1995, international equity issues were $3.3 billion, less than a third of the level recorded in the second half of 1994. The share of developing countries in total international equity placements fell sharply to 20 percent during the period. ADRs and GDRs continue to be, the major instruments used by developing countries to raise equity capital in the international market.

Asian companies more than doubled their international equity placements to a record of $12.1 billion in 1994, accounting for 67 percent of total international placements by developing countries. Much of the increase reflected a sharp rise in ADR and GDR issues, which grew from 27 percent of the value of total international equity issues from Asia in 1993 to 72 percent in 1994. Indian companies emerged as leading issuers in the region, raising $3 billion mainly through GDR issues, compared with $300 million in 1993. Chinese entities continued to be active in the market, with their issues totaling $2.6 billion, more than half of which was placed in the final quarter of the year. Chinese companies stepped up equity placements on the Hong Kong Stock Exchange (so-called H shares), accounting for 45 percent of their total placements in 1994. In contrast, issuance of B shares listed in Shanghai and Shenzhen fell sharply, reflecting problems on these exchanges. Indonesia and Pakistan recorded a sharp increase in equity placements to $1.4 billion and $1.2 billion, respectively, in 1994, primarily because of large single issues associated with the privatization of telecommunication companies in both countries. Korea and the Philippines were other major issuers in the region, raising $1.2 billion and $0.9 billion, respectively. SriLanka also entered the international equity market for the first time through a GDR issue by an industrial conglomerate.

In the first half of 1995, Asian companies raised $2.5 billion, less than a third of the level recorded in second half of 1994. However, their share in total issues by developing countries reached a record high of 78 percent. China was the leading issuer during the period, raising $437 million through ADRs and H shares. Other major Asian issuers included Singapore, Korea, the Philippines, and Indonesia.

Equity placements by developing countries in the Western Hemisphere declined from $6 billion in 1993 to $4.7 billion in 1994, with virtually all funds being raised through ADRs and GDRs. Although Mexico remained the leading issuer, its issuance steadily declined throughout 1994 to $1.7 billion, compared with $2.9 billion in 1993. After a hiatus in 1993, Brazil tapped the international equity market, raising $1 billion in 1994, including two ADR offerings by a large steel company totaling $372 million. Chilean companies stepped up issues to $0.8 billion, all through ADR issues. A commercial bank in Uruguay placed a small GDR, the first international equity issuance for that country, and Panama, after being on the sidelines in 1993, returned to the market with two issues by a private bank totaling $100 million. In the first half of 1995, there were only two issues totaling $430 million from the Western Hemisphere: a Panamanian cruise line raised $371 million, and a Brazilian food company placed a $59 million GDR issue.

Equity issues from Europe and Africa increased sharply in 1994, but their total value remained small. European developing countries raised $640 million, including $375 million by firms in Turkey and $200 million by those in Hungary. Companies from a number of economies in transition, including the Czech Republic, Estonia, Romania, and Russia, entered the market for the first time. In Africa, total equity placements amounted to $574 million in 1994, $398 million of which was raised through a GDR offering from a mining company in Ghana. In the Middle East, only companies in Israel placed new equities in the international market, raising $89 million in 1994. In the first half of 1995, European companies from the Czech Republic, Poland, and Turkey tapped the market through small issues, totaling $84 million. A $113 million GDR issue by an oil refining company in the Slovak Republic was the first international equity offering from that country. A commercial bank in South Africa was the only issuer from Africa in the first half of 1995, raising $125 million.

International equity issues by developing countries continued to be concentrated in telecommunications, banking and financial services, construction, energy, and electronics industries, with the sectoral distribution of issues varying widely across regions (see the Statistical Appendix, Table A12). In Asia, telecommunications companies were the leading issuers, followed by public utilities, iron and steel, electronics, and textile companies. In the Western Hemisphere, companies in the telecommunications, energy, and financial sectors accounted for the largest share of equity issues, in part reflecting privatization efforts in these sectors. In other regions, issuers were concentrated in a small number of industries: the transportation and mining industries in Africa, financial institutions in Europe, and electronics companies in the Middle East.

Commercial Bank Lending

Medium- and long-term bank commitments to developing countries increased by 38 percent to $53 billion in 1994 (Statistical Appendix, Table A13), after rising by II percent in 1993. Much of the increase took place in the first three quarters of the year. In the fourth quarter of 1994 and into early 1995, loan commitments slowed considerably, although the decline was much less severe than for international bond and equity placements. Since March 1995, lending activity has gained momentum, with medium- and long-term loans in the first half of 1995 amounting to $30.9 billion, compared with $26.7 billion in the second half of 1994. Asian entities have continued to be dominant borrowers, accounting for 64 percent of total loan commitments to developing countries in 1994. The share of Western Hemisphere entities declined significantly to 7 percent in 1994—less than two fifths of the level in 1994—while the share of borrowers in developing countries in Europe and the Middle East rose sharply to 15 percent and 13 percent, respectively. In the first half of 1995, loan commitments to Africa and the Middle East rose sharply, reducing the share of Asian borrowers.

The weighted-average interest rate spread over LIBOR on bank credits to developing countries rose slightly from 96 basis points in 1993 to 100 basis points in 1994, and to 107 basis points in the second quarter of 1995 (Statistical Appendix, Table A14). Reflecting creditor discrimination across developing countries, spreads over LIBOR varied considerably by borrower. Asian countries in general have commanded lower spreads, averaging 96 basis points in 1994 and slightly over 100 basis points in the first half of 1995, while economies in transition in general and some Western Hemisphere developing countries have been subject to significantly higher spreads. Despite the widening of interest rate spreads, the weighted-average maturity of loans lengthened from 6.6 years in 1993 to 7 years in 1994 and 8.1 years in the second quarter of 1995 (Statistical Appendix, Table A15). The rise in the maturity in the second quarter of 1995 was mainly due to large long-term loans to two borrowers in Africa and the Middle East.

Medium- and long-term bank loan commitments to Asian borrowers increased by 36 percent to $34 billion in 1994. China re-emerged as the largest borrower among these countries, as Chinese entities (mainly in the public sector) increased their borrowing activity to $6.6 billion. Thailand and Korea continued to be prime borrowers in 1994, receiving over $6.4 billion and $5.8 billion, respectively, in new loan commitments. Bank borrowings by entities in Hong Kong. Indonesia, and Malaysia all exceeded $2.0 billion each in 1994. Both Pakistan and India increased their recourse to bank borrowing significantly during 1994, receiving commitments totaling $ 1.5 billion and $1.2 billion, respectively. New entrants to the market included Brunei Darussalam and Sri Lanka, while Macao and Papua New Guinea each borrowed small amounts after a two-year hiatus.

Despite investor concerns following the Mexican crisis, lending to Asian countries remained relatively robust at over $16 billion during the first half of 1995. Although commitments to China during the first quarter of 1995 continued to be strong, the authorities’ intention to tighten foreign borrowing has reduced loans to China significantly since April. Hong Kong, Indonesia, Korea, and Thailand continue to be prominent borrowers; the pace of borrowing by India also has continued to rise.

Loan commitments to Europe rose sharply in 1994 to $7.9 billion after a drop in 1992-93. Much of the increase reflected borrowing by economies in transition. Russian entities were the leading bank borrowers, receiving commitments totaling $2.8 billion; a high proportion of these credits carried guarantees from official export credit agencies and were primarily related to energy, industrial, and infrastructure development. Borrowing by Hungary, the Czech Republic, and Poland also rose strongly over the course of the year. The Slovak Republic received its first bank loan commitment, and Bulgaria returned to the market after a two-year absence. Outside of economies in transition, Turkey continued to be a major borrower, receiving new commitments of $2.5 billion in 1994, including two sovereign loans, one of $500 million for aircraft financing and another of DM 1.1 billion for the purchase of two frigates for the Turkish Navy. Although borrowing activity within the region slowed considerably to $2.3 billion during the first half of 1995. Turkey has been a prominent borrower, receiving $0.6 billion in new loan commitments. Hungary, Poland, and Russia have also borrowed some $0.2 billion each. A public company in the Kyrgyz Republic received an eight-year $140 million loan to finance a gold mine project, the second loan to the country.

Recourse by borrowers from the Western Hemisphere to the syndicated bank credit market was considerably more limited in 1994, with medium- and long-term bank loan commitments to the region declining from $7 billion in 1993 to $3.7 billion in 1994. Mexico was the largest borrower in the region, raising $1.3 billion. Argentina also remained a prime borrower in the region, raising $0.9 billion over the year. In both countries, all loans were to private sector entities, primarily in the telecommunications and oil and gas sectors. Brazil, Chile, Colombia, Panama, Peru, and Venezuela received small commitments. Guatemala was a new entrant to the market with a $51 million electricity project cofinancing facility. Since the beginning of 1995, borrowing activity in the region has been subdued, although prime borrowers in countries such as Argentina, Brazil, Chile, and Panama have remained in the market. Mexico has also been able to access the market, with a $77 million sovereign refinancing loan, a one-year $70 million trade financing credit for PEMEX, and two small cofinancing facilities totaling $52 million for private sector entities.

While medium- and long-term credits to countries in the Middle East increased sharply from $ 1.3 billion in 1993 to $7 billion in 1994, almost the entire increase reflected a $4.8 billion borrowing by the Qatar Liquefied Gas Company to finance a new gas pipeline. The only other major commitments were to Israel, which borrowed $0.6 billion, representing public sector loans to the telecommunications, electricity, and airline sectors; and Oman, which received $0.3 billion, almost all of which represented sovereign borrowing. During the first half of 1995, three large loans dominated loan commitments to the region. Qatar received an additional $2.6 billion for its liquified natural gas project, of which $2 billion was guaranteed by the Export-Import Bank of Japan. The Islamic Republic of Iran received a $0.8 billion public financial sector refinancing loan that was provided by a consortium of Italian banks and was guaranteed by the Italian export credit guarantee agency, and Kuwait received a $0.4 billion aircraft financing loan guaranteed by the U.K. export credit guarantee agency. Loans totaling $0.4 billion were signed by two banks and an aluminum company in Bahrain; there also was a $250 million loan to an aluminum company in the United Arab Emirates.

Bank lending to Africa remained limited and very selective throughout 1994, with just $0.5 billion committed during the year, of which $0.3 billion represented aircraft financing loans to Mauritius, Morocco, and South Africa. In the first half of 1995, bank loan commitments to Africa increased sharply to $4 billion, mainly owing to a $3.2 billion refinancing loan to Algeria, the country’s first bank loan since 1993. The loan was part of a refinancing program and carried a nine-year maturity and a spread of 81 basis points over LIBOR. South Africa arranged $0.6 billion in loans, including a seven-year $265 million loan to finance developments in the mining and natural resources sector, and Tunisia received $0.5 billion in loans, primarily to finance natural gas and power plant projects.

The sectoral distribution of medium- and long-term bank loan commitments to developing countries varied significantly across regions over the period 1991-94 (Statistical Appendix, Table A16). In Asia, the transportation sector was the largest recipient, followed by the financial services, government, and energy sectors. In European countries, many of which are economies in transition, government entities were the largest bank borrowers, accounting for nearly half of loan commitment to the region; banks and energy companies were other major recipients. In other regions, entities in the government and energy sectors were leading recipients, followed by transportation companies.

Mutual Funds

Emerging markets mutual funds have played an increasingly important role in channeling portfolio to developing countries in recent years.21 In 1994 these funds continued to grow rapidly despite turbulent market conditions in many developing countries. The number of these funds increased from 594 at end-1993 to 908 by end-1994, and concurrently their total net asset value rose from $90 billion to $132 billion (Chart 10; see also Tables A17, A18, and A19 in the Statistical Appendix).22 The bulk of the assets of emerging markets mutual funds are invested in equities, representing 6.5 percent of total stock market capitalization in developing countries in 1994, compared with about 2 percent in 1990. Equity investment by these funds has been concentrated in Asia; the net assets of funds dedicated to Asian markets accounted for 58 percent of the net assets of all emerging markets mutual funds at end-1994. Net purchases of developing country bonds and equities by emerging markets mutual funds are estimated to have amounted to $62.5 billion in 1994, $32 billion of which took place in the final quarter of the year.23 Much of these purchases were accounted for by open-end funds domiciled in the United States, while closed-end funds and open-end funds registered outside the United States significantly reduced new purchases of developing country securities.

Chart 10.Net Assets of Emerging Markets Mutual Funds by Region

(Shares in percent; totals in U.S. dollars)

Source: Lipper Analytical Services, Inc.

In the First quarter of 1995, despite the Mexican crisis, the number of emerging markets mutual funds continued to increase, probably reflecting time lags involved in establishing these funds. However, the total net asset value of all funds declined to $120 billion by end-March 1995, the first decline since emerging markets mutual funds became a major vehicle for developing country security investment. During this period, as asset prices declined in major markets, emerging markets mutual funds appear to have curtailed new investments in developing country securities; they did not, however, engage in a significant sell-off of their existing holdings. Net capital inflows to developing countries through emerging markets mutual funds are estimated to have been $3.3 billion in the first quarter of 1995, about one tenth of their level in the final quarter of 1994. As prospects for the Mexican economy have improved and interest rates in the United States have begun to fall, investors are reported to have shown renewed interest in emerging markets mutual funds, and the funds are reported to have stepped up their purchases of developing country securities.

Correlations of Returns on Brady Bonds and Developing Country Stocks

The strong demand for developing country securities in recent years was in part driven by the portfolio-diversification strategies pursued by many investors. Average returns on developing country securities were higher than on comparable industrial country securities, reflecting the greater riskiness of the former assets. At the same time, it has been noted that the correlations between returns on developing country and industrial country securities and among developing country securities were relatively low. Thus, by adding developing country securities, an investor could raise the expected return on his portfolio for a given level of risk.24 However, the correlations among returns tend to shift over time. In particular, there appears to be a tendency for returns to become more highly correlated in periods of stress in financial markets.

This tendency is illustrated in Table 8, which shows correlations among total returns for Brady bonds for a selected group of developing countries and for U.S. Treasury bonds over four recent time periods. As the table indicates, correlations among Brady bond returns were relatively low throughout 1993 and into early 1994.25 Correlations rose sharply in the wake of the increase in U.S. interest rates beginning in February 1994 and remained high through mid-May, when more orderly conditions were restored to world financial markets. From mid-May to mid-December, correlations declined but were generally higher than in the January 1993-January 1994 period. After the floating of the Mexican peso in mid-December 1994, the correlations among developing countries in the returns on Brady bonds rose sharply, particularly among the Latin American countries. In contrast to the experience in early 1994, correlations between returns on Brady bonds and U.S. Treasury bonds actually declined after the Mexican crisis. This may reflect in part a “flight to quality” effect.

Table 8.Correlation Among Total Returns on Brady Bonds
CountryArgentinaBrazilMexicoNigeriaPhilippinesVenezuela
January 1993-January 1994
Argentina1.00
Brazil0.231.00
Mexico0.560.221.00
Nigeria0.410.110.581.00
Philippines0.290.220.320.331.00
Venezuela0.530.190.550.380.281.00
Thirty-year U.S. Treasury bond0.360.040.510.260.160.31
February 1994-mid-May 1994
Argentina1.00
Brazil0.571.00
Mexico0.840.511.00
Nigeria0.570.630.591.00
Philippines0.210.400.220.441.00
Venezuela0.720.580.650.750.351.00
Thirty-year U.S. Treasury bond0.740.420.630.400.180.46
Mid-May 1994-mid-December 1994
Argentina1.00
Brazil0.581.00
Mexico0.770.451.00
Nigeria0.420.330.351.00
Philippines0.260.110.250.091.00
Venezuela0.480.310.470.290.151.00
Thirty-year U.S. Treasury bond0.550.240.550.180.110.28
Mid-December 1994-early June 1995
Argentina1.00
Brazil0.781.00
Mexico0.820.721.00
Nigeria0.680.580.621.00
Philippines0.400.350.350.411.00
Venezuela0.830.800.770.740.411.00
Thirty-year U.S. Treasury bond0.260.230.160.120.160.22
Source: IMF staff estimates based on Salomon Brothers data.
Source: IMF staff estimates based on Salomon Brothers data.

The rise in the correlations in times of stress during these periods may partially reflect the composition of the investor base. A significant number of investors with similar characteristics and risk or return preferences entered the markets for developing country securities during the boom period in 1992–93, most notably in the form of mutual funds. This development could have established a tendency for these investors to move in tandem in response to a change in expected returns on developing country securities. The lack of substantial liquidity in most of these securities markets also would tend to reinforce this behavior. Moreover, limited liquidity may have lead to a bunching of investments in a few markets and in only a limited number of security issues. Another factor that may explain the high correlation among developing country bonds, particularly among Latin American countries, is the reported use by market participants of Mexican securities as benchmarks for the pricing of other countries’ bonds, Mexico was generally viewed as one of the best credit risks among developing countries, especially among those that had previously rescheduled debts to private foreign creditors.

A similar pattern can be observed in returns on stocks in major developing countries in Asia and the Western Hemisphere. Throughout 1993 and in early 1994, returns on stocks in these countries had relatively low correlations with those in the United States and in other developing countries outside these regions (Table 9). Following the increase in U.S. interest rates in February 1994, correlations of stock returns rose among countries within the same region (that is, among Western Hemisphere countries and among Asian countries), although correlations among different regions remained low. In the wake of the Mexican crisis, correlations among Western Hemisphere markets remained high, with the exception of Venezuela, where stock price movements appear more to reflect country-specific factors. Correlations among major stock exchanges in Asia rose somewhat following the Mexican crisis.

Table 9.Correlation of Changes in Stock Price Indices
CountryArgentinaBrazilMexicoVenezuelaIndonesiaMalaysiaPhilippinesThailandJapan
January 1993–January 1994
Argentina1.00
Brazil0.101.00
Mexico0.34-0.071.00
Venezuela0.06-0.051.00
Indonesia0.180.100.150.051.00
Malaysia0.13-0.300.080.210.111.00
Philippines0.230.040.340.220.200.381.00
Thailand0.29-0.12-0.03-0.130.010.440.111.00
Japan10.02-0.01-0.160.02-0.03-0.07-0.15-0.191.00
United States20.200.060.060.090.010.04-0.070.010.27
February 1994-mid-December 1994
Argentina1.00
Brazil0.361.00
Mexico1.620.501.00
Venezuela0.420.210.111.00
Indonesia0.280.190.300.021.00
Malaysia-0.090.060.05-0.030.511.00
Philippines0.03-0.110.080.010.380.221.00
Thailand0.490.170.360.200.490.540.321.00
Japan10.09-0.180.140.160.320.020.201.00
United States20.470.420.220.230.200.200.030.290.35
End-December 1994-May 1995
Argentina1.00
Brazil0.501.00
Mexico0.470.461.00
Venezuela-0.060.210.201.00
Indonesia-0.09-0.04-0.14-0.221.00
Malaysia0.03-0.210.08-0.190.671.00
Philippines0.22-0.040.14-0.110.770.881.00
Thailand0.010.080.04-0.190.800.660.761.00
Japan10.410.190.33-0.061.220.320.291.00
United States20.270.360.20-0.14-0.06-0.030.070.19-0.15
Source: IMF staff estimates based on Euromoney database.

Based on Nikkei 225 Index.

Based on Standard and Poor’s Index.

Source: IMF staff estimates based on Euromoney database.

Based on Nikkei 225 Index.

Based on Standard and Poor’s Index.

    Other Resources Citing This Publication