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Author: Laura Jaramillo Publisher: International Monetary Fund ISBN: 145520076X Category : Business & Economics Languages : en Pages : 23
Book Description
Emerging market countries seek investment grade status to lower financing costs for the sovereign, expand the pool of potential investors to institutional investors, and allow corporates the possibility of reducing their borrowing costs. Using a random effects binomial logit model on a sample of 48 emerging markets, the paper finds that, to a large extent, investment grade rating assignments can be explained by a handful of variables. The results also suggest that efforts by emerging markets to increase the likelihood of an upgrade should focus on debt indicators rather than the other key determinants of investment grade status.
Author: Laura Jaramillo Publisher: International Monetary Fund ISBN: 145520076X Category : Business & Economics Languages : en Pages : 23
Book Description
Emerging market countries seek investment grade status to lower financing costs for the sovereign, expand the pool of potential investors to institutional investors, and allow corporates the possibility of reducing their borrowing costs. Using a random effects binomial logit model on a sample of 48 emerging markets, the paper finds that, to a large extent, investment grade rating assignments can be explained by a handful of variables. The results also suggest that efforts by emerging markets to increase the likelihood of an upgrade should focus on debt indicators rather than the other key determinants of investment grade status.
Author: Laura Jaramillo Publisher: International Monetary Fund ISBN: 1455218987 Category : Business & Economics Languages : en Pages : 19
Book Description
Sovereign investment grade status is often associated with lower spreads in international markets. Using a panel framework for 35 emerging markets between 1997 and 2010, thispaper finds that investment grade status reduces spreads by 36 percent, above and beyond what is implied by macroeconomic fundamentals. This compares to a 5-10 percent reduction in spreads following upgrades within the investment grade asset class, and no impact formovements within the speculative grade asset class, ceteris paribus. While global financial conditions play a central role in determining spreads, market sentiment improves with lower external public debt to GDP levels and higher domestic growth rates.
Author: International Monetary Fund Publisher: International Monetary Fund ISBN: 1455208647 Category : Business & Economics Languages : en Pages : 30
Book Description
This paper presents empirical evidence on the effects of achieving investment grade on borrowing costs for the sovereign and the private sector. This study provides background information on sovereign credit ratings and compares Panama’s key macroeconomic and institutional characteristics with those of other emerging markets. Statistical evidence on the reduction in sovereign spreads associated with obtaining investment grade status and the impact of the sovereign’s upgrade on corporate financing costs were also discussed. The model is estimated using a variety of panel regression techniques.
Author: Mr.Serkan Arslanalp Publisher: International Monetary Fund ISBN: 151357065X Category : Business & Economics Languages : en Pages : 25
Book Description
Portfolio flows to emerging markets (EMs) tend to be correlated. A possible explanation is the role global benchmarks play in allocating capital internationally, the so-called “benchmark effect.” This paper finds that benchmark-driven investors indeed play a large role in a key segment of the market—the EM local currency government bond market—, accounting for more than one third of total foreign holdings as of end-2014. We find that the prominence of these investors declined somewhat after the May 2013 taper tantrum, but remain high. This distinction is important in understanding the drivers of EM capital flows and their sensitivity to different types of shocks. In particular, a high share of benchmark-driven investors may result in capital flows that are more sensitive to global shocks and less sensitive to country factors.
Author: Jerome Booth Publisher: John Wiley & Sons ISBN: 1118879678 Category : Business & Economics Languages : en Pages : 280
Book Description
The world is upside down. The emerging market countries are more important than many investors realise. They have been catching up with the West over the past few decades. Greater market freedom has spread since the end of the Cold War, and with it institutional changes which have further assisted emerging economies in becoming more productive, flexible, and resilient. The Western financial crisis from 2008 has quickened the pace of the relative rise of emerging markets - their relative economic power, and with it political power, but also their financial power as savers, investors and creditors. Emerging Markets in an Upside Down World - Challenging Perceptions in Asset Allocation and Investment argues that finance theory has misunderstood risk and that this has led to poor investment decisions; and that emerging markets constitute a good example of why traditional finance theory is faulty. The book accurately describes the complex and changing global environment currently facing the investor and asset allocator. It raises many questions often bypassed because of the use of simplifying assumptions and models. The narrative builds towards a checklist of issues and questions for the asset allocator and investor and then to a discussion of a variety of regulatory and policy issues. Aimed at institutional and retail investors as well as economics, finance, business and international relations students, Emerging Markets in an Upside Down World covers many complex ideas, but is written to be accessible to the non-expert.
Author: Benjamin Heckmann Publisher: GRIN Verlag ISBN: 3640416066 Category : Business & Economics Languages : en Pages : 40
Book Description
Seminar paper from the year 2007 in the subject Business economics - Business Management, Corporate Governance, grade: 2,0, University of Münster (International Management), course: Seminar International Finance, language: English, abstract: The paper deals with Private Equity Investments in Emerging Markets. This asset class is associated with attractive opportunities and appropriate risk-adjusted returns. The Private Equity industry in Emerging Markets showed strong growth over the last few years – after a period of disappointment and unmet expectations. Private Equity is a primary source of equity for small and medium sized companies. It is associated with higher default risk but offers the opportunity to receive higher returns. One special characteristic is the provision of ‘smart money’, the integration of investment banking and management consultancy. The environment of Emerging Markets is challenging. The term refers to capital markets in developing countries with outstanding growth opportunities. 35 countries from Latin America, Central and Eastern Europe, Asia, Middle East and Africa belong to the group of Emerging Markets. These markets are characterised by weak legal institutions, political and economic risk, dysfunctional capital markets and a low standard of corpo-rate governance. The combination of the high risk asset class Private Equity with the high risk environment of Emerging Markets results in high risk investments. But the superior return op-portunities attract more and more investors. After a period of disappointment and setbacks – due to an inappropriate approach – at the beginning of the 21st century this asset class took off. Fundraising figures from 2003 to 2006 are increasing strongly and the investors expect the growth to continue. The macroeconomic environment, the legal framework and the quality of capital markets are the main determinants for Emerging Markets Private Equity. The introduction of good corporate governance is essential for the provision of a hospitable investment climate. If the legal framework is weak, efficient governance structures can serve as a substitute. Intensive due diligence, monitoring, involvement, networks, diversification and exiting are the key success factors for Private Equity firms engaging in Emerging Markets. With an appropriate adjustment of the strategy, risk can be mitigated and the investment is likely to be successful. Emerging Markets Private Equity can be beneficial for both the investors and the entrepreneurs. Especially small and medium sized enterprises and family-owned companies in Emerging Markets benefit from this source of equity while investors receive potential extraordinary returns and diversify their portfolio.
Author: Tessa Hebb Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
Institutional investors, primarily pension funds, dominate global financial markets. Increasingly, these investors are turning their attention to emerging markets and applying both traditional financial and non-financial metrics to their investment decisions. Following the 1998 Asian Financial Crisis, many large institutional investors have come to believe non-financial attributes, particularly in emerging markets, can both indicate potential equity premia and more importantly, be used as risk management tools within investment portfolios. These investors apply non-financial criteria not only to individual firms in emerging markets, but also to whole countries' corporate practices. Countrywide indices such as PricewaterhouseCoopers' Opacity Index back up such investor intuition. While countries and their regulatory regimes are central to external capital investment decisions, convergence to global standards occurs when key actors in the investment value chain demand levels of corporate and social behaviour greater than those currently consistent with countries' regulatory frameworks. We establish this claim through three critical pieces of analysis. First, we show that countries' legal origins are no longer strong determinants for achieving the global standards required for investment in emerging markets (for importance of legal origin see La Porta et. al. 1997). Second, we demonstrate that emerging market countries, when excluded from foreign investment, improve their corporate practices and standards in order to attract that investment in the future. Third, we find that convergence to global standards is not strongly influenced by the wealth of the emerging market country, but rather as a direct reaction to exclusion from foreign investment in the previous period. We examine country-specific investment decisions taken by institutional investors in emerging markets with particular reference to the California Public Employees Retirement System (CalPERS) to test this hypothesis.
Author: Laura Jaramillo
Author: Laura Jaramillo
Author: Laura Jaramillo
Author: International Monetary Fund
Author: Mr.Serkan Arslanalp
Author: Dennis Parker
Author: Jerome Booth
Author: Benjamin Heckmann
Author: Michael Pettis
Author: Jeppe Ladekarl
Author: Tessa Hebb