The effects of foreign investor composition on Colombia's sovereign debt flows

Fredy Gamboa-Estrada and Andres Sanchez-Jabba

International Economics, 2024, vol. 178, issue C

Abstract: Assessing the composition of sovereign debt holders is important because investors' behavior varies according to distinctive components, including shareholders' preferences, regulatory constraints, and profitability mandates. To study this issue, we examine the determinants of offshore investments of mutual funds and pension funds, which concentrate Colombia's outstanding sovereign debt. Our results indicate that mutual funds exhibit considerable sensitivity to shocks in global factors, such as the Federal Funds Rate, sovereign risk, and the composition of financial indices. This contrasts with findings among pension funds, for which we detected a lower sensitivity to these factors, underlining the differences in foreign investor behavior that can impact sovereign debt flows within emerging markets.

Keywords: Foreign investors; Sovereign debt flows; Global shocks; Generalized method of moments (search for similar items in EconPapers)
JEL-codes: C22 G11 G15 G23 (search for similar items in EconPapers)
Date: 2024
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Working Paper: The Effects of Foreign Investor Composition on Colombia’s Sovereign Debt Flows (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:inteco:v:178:y:2024:i:c:s2110701724000301

DOI: 10.1016/j.inteco.2024.100507

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