Debt Management
Are central banks the ‘Figaro’ of the financial markets?
Central banks continue to play a vital position in the functioning of markets. While this raises significant concerns about moral hazard it is not an unfamiliar role from an historical perspective
Book notes: Sovereign debt management, by Rosa María Lastra and Lee Buchheit
An immensely valuable compilation of contributions by lawyers and several economists on sovereign debt. This book is eminently readable, in spite of its difficult subject matter
Lagarde lauds new Mexican bonds with ‘strengthened' collective action clauses
Mexico issued $2 billion in 10-year bonds with new collective action clauses, which Lagarde says ‘will play a critical role in enhancing the architecture for sovereign debt markets’
BIS paper proposes defence against market panics
Proposal would see governments link level of borrowing to interest rates, breaking the vicious cycle of rising rates leading to increased default risk
IMF calls for ‘modified pari passu clauses’ in new international sovereign bonds
Executive board supports contractual reforms making process of sovereign debt restructuring ‘more orderly’; Staff paper outlines stronger collective action clauses
Bank of Lithuania invests $100 million into Chinese capital markets
Central bank becomes one of the first in Europe to invest in Chinese securities, as part of a new investment policy seeking higher returns
Balance sheet saw ‘substantial’ growth in past year, says RBA’s Stevens
Combined impact of replenished capital and new financial market operations has seen balance sheet swell, according to the Reserve Bank of Australia’s annual report for 2014
Summers calls on Fed and US Treasury to 'fully' coordinate debt management
Paper published today finds Treasury purchases of long-term bonds offset ‘about a third’ of QE benefits to US economy post-crisis; Fed governor dismisses controversial proposal
Supreme Court clears Central Bank of Sri Lanka over Greek investment
Sri Lankan governor and monetary board members cleared over investment in Greek government bonds; Supreme Court says investment decisions ‘best left to central bank’
EM East Asian bond success could be undermined by ‘tighter liquidity’
ADB says US interest rates, geopolitical tensions and a ‘slowing property market’ in China could undermine the performance of East Asian bonds
Bank rules and their impact on inequality
Banking regulation has a profound effect on levels of long-term financial inclusion around the world; US engaged in a failed ‘lottery ticket’ effort by the US to offer housing to the poor.
IMF paper says long-term debt creates ‘incentive to default’
Research examines relationship between maturity structure of sovereign debt portfolios and the probability of default; considers impact of uncertainty around future fundamentals
Hong Kong's first Islamic bond raises $1bn
Five-year sukuk sells at ‘tightest spread ever achieved’ over US Treasuries; strong demand from across the globe sees orders in excess of $4.7 billion
IMF economist analyses effect of floods and storms on Caribbean debt-to-GDP
Both storms and floods have a negative effect on growth, IMF economist finds, but only floods affect debt in the natural disaster-hit region
Bank of Ghana admits monetising government debt
Central bank offers relief as investor flight drives sovereign bond yields to spike; ‘printing money to finance the deficit' will cause inflation and currency depreciation, Fitch warns
EU sovereign debt managers fall in line with two-day settlement rule
EU member states' treasuries will settle over-the-counter sovereign bond transactions in a maximum of two days from October this year
Turkey’s pursuit of output-based models
The Central Bank of Turkey has shifted from using input-based approaches to output-oriented models for budgeting purposes in a bid to optimise its use of public resources. By Eyup Kahveci.
Anti-capitalist group claims responsibility for Bank of Greece bombing
The ‘Revolutionary Struggle', a terrorist group that the Greek police claimed to have dismantled in 2010, says it was behind the attack that injured two on April 10
Frontier bonds find buyers as investors reach for yield
Pakistan sells $2 billion worth of Eurobonds as investors look for alternatives to US Treasuries; Greece and Swaziland among countries to find success with bonds in own currency
RBA’s Debelle sees mixed future for bond markets
Guy Debelle says corporate bond issuance will remain ‘subdued’ in the near term as large Australian companies have ‘accumulated significant cash balances’
HKMA and Bank Negara Malaysia combine to promote sukuk market
Central banks in Hong Kong and Malaysia working together to promote Islamic finance; Hong Kong government nears $500 million sukuk issuance
Countries in monetary union should index sovereign debt to GDP growth
Bank of England working paper finds GDP-indexed bonds should be used more widely, especially by countries with volatile GDP growth or in monetary unions
Ukraine wins EU rescue package as finance ministry threatens debt restructure
European institutions will come up with €11 billion over the next five years; European Commission proposes international donor co-ordination mechanism
IMF paper finds highly indebted nations can still grow fast
Results of a new study contradict findings of Reinhart and Rogoff, who argued that growth declines at debt of more than 90% of GDP