Localising sovereign debt: the rise of local currency bond markets in sub‐Saharan Africa

Florence Dafe, Dennis Essers and Ulrich Volz

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper analyses the development of local currency sovereign bond markets (LCBMs) in sub‐Saharan Africa (SSA), a potentially important source of longer‐term public finance. We make two contributions to the literature. First, we build a novel data set comprising 28 SSA countries for the period 2000–14 to uncover the main correlates of LCBM capitalisation, of local currency bond (LCB) tenors and of LCB issue yields. We find that LCBM capitalisation in SSA relates to politico‐institutional factors, overall financial development and financial system structure. For LCB tenors and issue yields, inflation levels matter too. Second, we complement our econometric analysis with qualitative case studies of Kenya and Nigeria, where we further investigate the drivers of LCBM development and place LCBMs in a broader public debt context. While we document the increasing importance of LCBMs in SSA, we also highlight new vulnerabilities, including those related to investor base composition.

Keywords: local currency bonds; long‐term finance; public debt; sub‐Saharan Africa (search for similar items in EconPapers)
JEL-codes: F21 F34 G23 H63 O11 (search for similar items in EconPapers)
Date: 2018-12-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (40)

Published in World Economy, 1, December, 2018. ISSN: 0378-5920

Downloads: (external link)
http://eprints.lse.ac.uk/87636/ Open access version. (application/pdf)

Related works:
Journal Article: Localising sovereign debt: The rise of local currency bond markets in sub‐Saharan Africa (2018)
Working Paper: Localising Sovereign Debt: The Rise of Local Currency Bond Markets in Sub-Saharan Africa (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:87636

Access Statistics for this paper

More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager ().