O V E R V I E W
Figure 13. Gross Medium-Term Commercial Bank Flows to Developing Countries, 2000–09
Table 5. Net Short-Term Debt Flows to Developing Countries, 2007−09 $ billions
$ billions
Region
450 400 350
2007
2008
East Asia and Pacific
55
11
55
Europe and Central Asia
76
15
38
Latin America and the Caribbean
33
4
2
4
4
2
13
8
1
4
5
10
184
14
6
Middle East and North Africa South Asia
300
Sub-Saharan Africa
2009
250
All developing countries
200
Sources: World Bank Debtor Reporting System and Bank for International Settlements.
150
Table 6. Bond Issuance by Developing Countries, 2008–09
100
$ billions
50
Sovereign borrowers
0 2000
2005
2006
2007
2008
2009
Region
2008
2009
Corporate borrowers 2008
2009
Gross disbursements public borrowers
East Asia and Pacific
5.2
13.9
0.4
2.7
Gross disbursements private sector borrowers
Europe and Central Asia
17.9
15.3
16.3
3.2
Latin America and the Caribbean
27.8
Principal payments public borrowers Principal payments private sector borrowers
Source: World Bank Debtor Reporting System.
32.5
32.4
8.4
Middle East and North Africa
2.3
2.9
0.0
0.2
South Asia
0.0
0.7
0.6
2.5
Sub-Saharan Africa All developing countries
was East Asia and the Pacific, where the net inflow of short-term capital returned to pre-crisis levels. The region recorded inflows of $55 billion in 2009, the same as in 2007, and a $66 billion turnaround from outflows of $11 billion in 2008. Countries in the Middle East and North Africa also saw short-term debt rebound in 2009. All other regions had to contend with net outflows of short-term debt in 2009 (table 5). This situation was particularly marked in the case of Europe and Central Asia, where outflows rose to $38 billion, more than double the $15 billion outflow recorded in 2009. Short-term debt flows also turned sharply negative in Sub-Saharan Africa (−$10 billion), driven primarily by outflows from South Africa. International bond issuance by developing countries contracted in 2008 as the global financial crisis unfolded but increased strongly in 2009. It soared after the first quarter of the year to $104 billion for the entire year, an increase of 24 percent over its 2008 level, as investor confidence returned and demand for riskier assets increased. Emerging market bond spreads narrowed, falling to near pre-crisis levels by the year’s end, from an
0.0
2.2
0.0
0.0
57.9
67.4
25.7
36.4
Source: World Bank Debt Reporting System.
average of 700 basis points in early March. Latin America and the Caribbean led the way in sovereign bond issuances, with countries in the region raising a total of $32 billion in 2009, almost identical to the amount they raised in 2008 (table 6). Sovereign bond financing in East Asia and the Pacific jumped to $13.9 billion, from $5.2 billion in 2008, because of new issuances by Indonesia, Malaysia, and the Philippines. There was a 15 percent decline in sovereign bond issuance by countries in Europe and Central Asia in 2009, but Lithuania, Russia, and Turkey all came to the market in 2009. Corporate issuances increased by 42 percent in 2009 to $36.5 billion but were limited principally to high-grade borrowers, suggesting that the market is still largely closed to high-risk corporate borrowers. Corporate bond issuances, as a share of total bond issuances, were 35 percent in 2009, broadly unchanged from their share in 2008. But there was a marked regional shift. In 2008, Russian borrowers accounted for 56 percent of corporate bond issuances by all developing
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