21977 Vol. 1 No.3 May 1994 FILE COPY -.,TE NTs .SNAN SUMM A R' INTERNATIONAL LENDING was rated by Moody's; so, too, was Chile's. AND CAPITAL MARKETS Moody's and Standard & Poor's downgraded Turkey, and S&P lowered Venezuela's X DEVELOPING-COUNTRY rating. BORROWING PAGE 4 Developing countries raised $25 billion through bonds and loans in the fourth quar- EQuITY PORTFOLIO AND ter of 1993, and about $75 billion for the FOREIGN DIRECT INVESTMENT year. Bond issues dropped sharply to $13.6 billion in the first quarter of 1994, on a rever- M EMERGING STOCK MARKETS PAGE 12 sal in cyclical global factors. Rising interest The IFC's dollar-based composite index fell rates pushed up the share of floating-rate 9.4 percent in the first quarter, led by a slide note issues, and the quarter saw first-time in Asian stock markets. A sell-off by foreign FRN issues by the Republic of Argentina and investors on rising US interest rates (fol- Pemex. Non-investment-grade credits, led by lowed by domestic investors' selling) fueled Mexico's Nacional Financiera, tapped Asia's the fall in share prices. Dragon bond market. The yen and Yankee markets also saw some issuing activity by emerging-market borrowers. U NEW EQUITIES, QUASI-EQUITIES, AND DERIVATIVES PAGE 14 In the first quarter, international equity N GLOBAL BORROWING PAGE 8 issues by developing-country entities were Fueled by low interest rates, international moderate. Several new funds were launched, capital market activity was $206.7 billion in and African funds raised about $400 million the fourth quarter of 1993 and a record from investors seeking high potential $810.5 billion for the year. At $481 billion, returns. bond issues in 1993 were up 44 percent over the previous year. Excluding refinancing, voluntary new syndicated lending in 1993 was * FOREIGN DIRECT INVESTMENT at its lowest level since 1986, but, spurred by AND PRIVATIZATION PAGE 16 privatization, equity issues were at a record A United Nations study projects moderate $40.7 billion last year. growth, although lower than in the 1980s, in FDI inflows to developing countries in the medium term. Several countries report X COMMERCIAL BANK CLAIMS PAGE 9 progress on privatization. Cross-border claims of BIS reporting banks (including foreign lending) rose by $183.2 billion in the third quarter of 1993, but claims on developing countries fell. Bank SECONDARY MARKETS lending continues to be focused -on high- FOR DEVELOPING- credit developing Asian countries. Rising US long bond yields fueled a broad * MARKET CREDITWORTHINESS PAGE 10 decline in secondary market debt prices. Greater integration with industrial-country Market volatility reached a record high on markets has improved developing-country large sell-off activity. Secondary market creditworthiness, according to Institutional returns on developing-country new issues Investor. Indonesia's foreign currency debt were also sharply lower. 2 FINANCIAL FLOWS AND THE DEVELOPING COUNTRIES COiNTENTS AND SUMMARY OFFICIAL FLOWS: FINANCIAL BRIEF: LEGAL 7> MULTILATERAL AND BARRIERS AND FOREIGN BILATERAL INVESTMENT PAGE 22 e1 MULTILATERAL FLOWS PAGE 1 9 Although integration is on the rise, emerging In February, the IMF unveiled its enlarged markets remain largely segmented from Enhanced Structural Adjustment Facility (a international capital markets because of concessional lending facility). The World legal and other barriers. Bank provides loans to accelerate develop- ____ ment of Argentina's capital markets. STATISTICAL APPENDIX I BILATERAL ODA AND EXPORT Q TOTAL EXTERNAL DEBT PAGE 24 CREDITS PAGE 19 In the first quarter of 1994, the Export- f AGGREGATE NET LONG-TERM Import Bank ofJapan approved Y58.9 billion RESOURCE FLOWS PAGE 25SecN lbrary in new untied loans and guarantees. lnteMaonal Bank for RbeoroucUon X BANK AND TRADE-RELATED - & Development NONBANK CLAIMS PAGE 191994 DEBT RELIEF UPDATE IIY1919 M COMMERCIAL BANK CLAIMS * OFFICIAL CREDITORS PAGE 20 ON DEVELOPING COUNTRIES PAGE 27- 2 7 In the first quarter, Paris Club creditors rescheduled debt service of Cameroon, C6te N COMMERCIAL BANK CLAIMS d'Ivoire, Niger, and Senegal on enhanced ON DEVELOPING COUNTRIES, Toronto terms; they also rescheduled BY COUNTRY OF ORIGIN PAGE 28 Kenya's debt. In April, the Central African Republic received enhanced Toronto terms, * MATURITIES OF BANK CLAIMS and the Paris Club rescheduled Bulgarian ON DEVELOPING COUNTRIES PAGE 32 and Gabonese debt. r FUNDS RAISED ON INTER- NATIONAL CAPITAL MARKETS PAGE 33 * COMMERCIAL CREDITORS PAGE 20 Poland reached an agreement in principle * SECONDARY MARKET DEBT on restructuring commercial bank debt. PRICES PAGE 34 Brazil concluded its commercial debt restructuring accord in April, after banks 1 NET FOREIGN DIRECT waived the requirement of an IMF loan. INVESTMENT FLOWS TO DEVELOPING COUNTRIES PAGE 35 COMMERCIAL BANK m EMERGING STOCK MARKETS PAGE 36 PROVISIONING AND CAPITAL ADEQUACY PAGE 21 m COUNTRY GROUPS PAGE 37 US bank profitability slows, but remains high on continuing improvement in asset quality and cost saving.Japanese banks increase loan write-offs. MAY 1994 3 ,~ _R ',,k_F`_1 6- ^LE ui< D +,.-, C54 ND J API rAL MARKETS DEVELOPING-COUNTRY TABLE 2 BORROWING BOND ISSUES BY TYPE OF BORROWER * SPURRED BY LOW INTEREST RATES, US$ millions 1993 DEVELOPING COUNTRIES RAISED ABOUT $75 1992 1993 Q4 Qi BILLION IN MEDIUM- AND LONG-TERM DEBT Al developingcountres 21,244 55,381 19,765 13,566 IN 1993 Pcivate 9,771 19,942 8,235 5,337 Sub-Saharan Africa 73 0 0 0 According to the OECD, developing coun- EastAsia and Pacific 2,121 4,503 2.448 2,488 tries raised $25 billion in international bond South Asia 0 556 481 239 Europe and Central Asia 65 290 0 100 and loan markets in the fourth quarter of Lat n America and Caribbean 7,51 2 14,593 5,307 2,510 1993, pushing the total for the year to about Middle East and North Afrca 0 0 0 0 $75 billion. Bond financing outstripped Sovereign 5,761 19,904 6,475 3.495 Sub-SaharanAfrca 315 0 0 0 bank credit and accounted for almost 75 per- East As a and Pacifc 300 907 300 190 cent of the total (table 1). Latin America led South Asia 0 0 0 0 Europe and Central Asia 4,446 15,115 4,875 1,605 with $27.2 billion in borrowings, mostly Latin America and Caribbean 700 3,882 1,300 700 through bond issues (92 percent). Asian Middle East and North Africa 0 0 0 0 countries raised $26.5 billion, of which $12.4 Other public 5,712 15,535 5,056 4,735 Sub-Saharan Africa 336 0 0 0 billion was in loans. Of the $6.3 billion raised East Asiaand Pacfc 2,8 8 8,085 3,537 1,354 by Central and Eastern Europe, most (91 per- South Asia 0 0 0 200 Europe and Centra Asa 23 894 130 29 cent) was in bonds. Latin America and Caribbean 2,435 6,556 1,389 2,875 Middle East and North Africa 0 0 0 278 al DEVELOPING-COUNTRY BOND ISSUES Source: Euromoney Bondware. DROPPED SHARPLY IN THE FIRST QUARTER OF 1994 the Federal Reserve to raise short-term inter- Cyclical global factors dominated bond est rates and also sent long-term rates higher. issues by developing countries in the first Liquidation of highly leveraged positions by quarter of 1994. Concerns that economic hedge funds, which had not anticipated the growth in the US would fuel inflation caused Fed tightening, and weak investor sentiment spilled into a sell-off in global bond and TABLE t equity markets. INTERNATIONAL BORROWING BY SELECTED DEVELOPING Compared with 1993, when foreigners, COUNTRIES especially US investors, purchased large US$ millions 1992 1993 1993Q3 1993Q4 amounts of emerging-market securities, the Total Bonds Total Bonds Total Bonds Totol Bonds first quarter saw substantial selling and large Argentina 1,529.2 1,529.2 6,473.2 6,097.2 2,092.1 1,716. 3,440.1 3,440.1 foreign capital outflows from emerging mar- Brazil 3,010.0 2,830.0 6,449.4 6,120.4 1,850.0 1,550.0 2,155.4 2,155.4 kets. This reportedly came not from pension Chile 350.0 0 774.6 432.6 342.0 0 100.0 100.0 China 4,043.2 1,273.2 6,756.0 2,956.8 1,794.1 1,021.3 1,082.1 770.8 funds and insurance companies, but from Czech Republica 39.5 15.5 902.6 702.6 327.6 327.6 0 0 short-term and trading-oriented investors. Hungary 1,446.1 1,234.8 5,070.7 4,808.5 1,331.3 ,301.3 2,041. 1.860.0 India 200.6 0 475.0 445.0 155.0 125.0 320.0 320.0 After a record fourth quarter of 1993, Indonesa 2,641.2 611.0 3,726.0 1,725.9 835.9 0 1,691.4 ,195.9 developing-country bond issues slumped in Korea, Rep. of 5,204.0 3,181.6 7,718.8 5,646.2 1,228.4 939.4 3,480.6 2,924.5 Malaysia 1,270.6 0 1,611.1 0 479.1 0 292.0 0 the first quarter of 1994. At $13.6 billion, vol- Mexico 3,373.6 2,923.4 9,751.5 9,35 .4 1,214.8 1,214.8 2,710.9 2,710.9 ume was down 31 percent (table 2). Pakistan 0 0 92.3 92.3 0 0 92.3 92.3 Sovereign borrowing was down by 46 percent Poland 8.7 0 0 0 0 0 0 0 Tha land 2,718.3 646.1 5,550.4 2,1 66.5 1,701 .3 453.0 1,766.7 1,005.6 on the previous quarter, and private borrow- Turkey 4,579.9 2,777.1 5,762.7 3,858.8 919.9 579.9 2, 68.9 1,644.5 Venezuela 1,035.4 830.4 2,931.3 2,142.9 2,068.3 1,498.3 187.2 187.2 ers issued 35 percent less. Public sector bor- Zimbabwe 1 15.0 0 90.0 0 0 0 90.0 0 rowing also fell, but at a slower pace. At $3.4 Note: Bonds include both internationa ssues (euromarkets) and traditiona foreign issues. billion, Mexico topped the bond issue league a. Data before Apr I 1993 refer to Czechoslovakia. Source: OECD, Financial Statistics (wonth y), February 1994. table. Thailand and China issued $1.7 billion 4 FINANCIAL FLOWS AND THE DEVELOPING COUNTRIES iN TERNATiO)NAL.- LENDI NG AND CAPITAL MA TKET 3 and $1.5 billion, respectively, closely fol- E THE STRUCTURAL TREND TOWARD lowed by Korea and Argentina with $1.2 bil- GREATER PORTFOLIO DIVERSIFICATION BY lion and $1.1 billion, respectively. Some GLOBAL INVESTORS CONTINUES major borrowers were virtually absent from US pension funds, which afewyears ago held the market. Nevertheless, Hungary contin- only 3 percent of their assets overseas, are ues to diversify its funding sources, with a diversifying globally. At $46 billion, net new recent 2 billion Luxembourg franc bond. funds invested by US pension funds in for- eign assets doubled in 1993, according to * WEAK INVESTOR DEMAND CONTAINS Intersec Research Corporation. Most of the GLOBAL ISSUES new investments ($35 billion) were in stocks, Unfavorable bond market conditions with only $8 billion in fixed-interest instru- choked off emerging-market borrowers' ments; more than half was invested in activity in the global issues sector in the sec- Europe, Australia, and the Pacific region. ond half of the quarter. Global issues are Higher prices and net new investment popular with issuers because they save costs pushed up these funds' total foreign assets to and broaden investor bases. Even so, the first $260 billion in 1993, from $156 billion at the quarter saw only two large global issues. end of 1992. About 7 percent of new funds Mexico's Bancomext launched a 10-year, $1 was invested in emerging markets ($3 billion billion issue in January, at a spread of 163 to $4 billion), bringing the total investments basis points over comparable US Treasuries. by US pension funds in emerging markets to China followed with a 10-year, $1 billion well over $10 billion at the end of 1993. This global in early February at a launch spread of compares favorably with $5.2 billion in 1992 85 bp over Treasuries. About 60 percent of and less than $2 billion in 1989. both issues were placed with US institutional UK pension funds also boosted their investors. share of foreign securities. WM Company Despite weakness in international bond reports that UK companies, with $566 billion markets, there were some first-time issuers. in assets, increased their allocation for the The Republic of Malta made its debut with a Pacific region (excludingJapan) from 4.8 to 15-year, $205 million bond issued by the 7.5 percent in the last quarter of 1993. Freeport Terminal (Malta) Limited. The issue, rated A2 by Moody's and A by Standard U JAPANESE INSTITUTIONAL INVESTORS & Poor's, was launched at a spread of 115 bp PLAN GREATER DIVERSIFICATION-BUT INTO over comparable US Treasuries. AsIA'S EMERGING MARKETS Also in the quarter, Peru made its debut Japanese institutional and retail investors in the euromarket with a three-year, $40 mil- continue to approach emerging-market lion amortizing note, priced at 680 bp over securities cautiously. They require high Treasuries. Bolivia returned to the bond mar- credit quality and shun high-retum, high-risk kets with a $10 million issue on a $25 million assets. They also prefer shorter-term securi- euro-MTN program established for BHN ties, about three years. Japanese investors Multibanco at a spread of 500 bp. After an with large investable funds are also reluctant absence of 13 years, Costa Rica also returned to go into small markets, where the impact with a $50 million issue by the state-owned on overall porffolio return is tiny. energy and telecommunications company. Nevertheless, a survey ofJapanese institu- The quarter also saw first-time borrowing by tional investors by Euromoney indicates that the Republic of Congo and Tunisia in the these investors are planning to invest in international bond markets (see below). And emerging markets, notably international the city of Prague offered a five-year, $250 bond and equity issues by Asians. The survey million issue in April. covered 53 investors, including banks (six MAY 1994 5 INTERNATIC)NAL LENDWICG AND CAPITAL MARKETS (figure 1). At 21 percent, this compares with FIGURE B 2 percent in the third quarter of last year. TOTAL BOND ISSUES FROM DEVELOPING COUNTRIES, BY TYPE About 40 percent of bond financing by US$ billions Mexican entities was at floating rates, and at 19.8 * Convertible $490 million, Korean entities had more than _ Floating-rate 40 percent of issuance through FRN. a Fixed-rote The quarter also saw first-time floating-rate 13.6 notes by some borrowers, as well as some inno- vative issues. The Republic of Argentina issued its first FRN, a one-year, $350 million note at 100 bp over six-month LIBOR. The note is callable at six months. Pemex also issued its first floating-rate instrument. The five-year, $300 million note was priced at 100 1993Q4 1994QI bp over three-month LIBOR. Pemex also Source. Euromoney Bondwar. offered an innovative resetting-collar FRN, the first for an emerging-market issuer. The city, 1O regional, and eight foreign),18 insur- two-tranche deal contained a conventional ance companies, four trust banks, three secu- ("plain vanilla") $200 million FRN and a $200 rities houses, and four trust and asset million reset-collar FRN. Under the innova- management companies. Thirty percent of tive structure, the range around LIBOR is respondents invest in Samurai (the yen- reset every quarter, which is intended to elim- denominated public bond market for for- inate the interest rate risk on a traditional col- eign issuers) bonds issued by Asians, and lared FRN. almost as many invest in eurobonds by Asian Spreads on fixed-rate bonds fell, but this issuers. Less than 11 percent invest in is a reflection of cost conditions in the early eurobonds by Latin American issuers and part of the quarter as the fixed-rate market samurai bonds by Latin American entities. for new issues practically dried up in the sec- Investment in emerging equity markets was ond half. Weak demand for developing- concentrated in Asia-Indonesia, Malaysia, country bonds reduced the average maturity and Thailand. The exception in Latin of issues (figure 2), but the average issue size America was Mexico, where 19.7 percent of was slightly larger (on account of low issue respondents reported equity investments. volume and two large global bonds). In the Some Japanese institutional investors are first quarter, Uruguay succeeded in extend- also investing in equity markets in Latin ing its yield curve with a seven-year, $100 mil- America through their US subsidiaries. lion issue in the second half of February. Previous issues from the country were at * RISING INTEREST RATES AND GREATER three and five years. VOLATILITY PUSH UP ISSUES OF FLOATING- RATE NOTES U NON-INVESTMENT-GRADE CREDITS ARE As investors sought to protect themselves in TAPPING THE ASIAN DRAGON BOND MARKET an environment of rising interest rates and Following China's entry into the nascent volatility, there was a shift toward FRN issues Dragon bond market-Asia's regional capi- (even though investor demand for FRN was tal market-last October, some emerging- also weak). Floating-rate notes, which are less market issuers have now entered this sector. sensitive than fixed-rate bonds to interest Until recently the market had seen only blue- rate uncertainty, saw more than a doubling chip issuers, but now there is more demand of their share in total issues over the quarter for high-yield, lower-grade, and below-invest- 6 FINANCIAL FLOWS AND THE DEVELOPING COUNTRIES INTERNATIONAL LEND}NG AND CAPITAL MARKETS ment-grade credits. Nacional Financiera rowers in Europe and Central Asia financed (Nafinsa), the Mexican development bank, almost $700 million (40 percent) in yen. The launched a five-year, $250 million FRN at quarter also saw borrowing by Tunisia. It three-month LIBOR plus 100 bp, the first entered the international bond market for non-investment-grade credit (rated Ba2 by the first time in February, launching a 10- Moody's and BB+ by Standard & Poor's). The year, Y30 billion offering in the Samurai mar- issue was raised from an initial $200 million, ket. The issue was rated BBB+ byjapan Bond and the bonds were sold in Asia. Research Institute. After raising over $700 Elsewhere, the Philippine National Bank million in this market in the fourth quarter launched a three-year, A$75 million issue, of 1993, Latin American borrowers financed priced at 178 bp over Australian government virtually all funds in US dollars in the first bonds. The issue, only the second Dragon quarter. bond denominated in Australian dollars, FIGURE 3 attracted strong demand from investors seek- 1 EMERGING-MARKET ISSUERS ARE CURRENCY ing high-yield instruments in that currency. ATTRACTED TO THE YANKEE MARKET COMPOSITION OF BOND ISSUES, In March, Indonesia also entered this mar- The first quarter saw some first-time issuers 1994QI ket, with a $159 million FRN bv PT Bank in the Yankee (the US-dollar-denominated Ekspor Impor Indonesia. The issue was foreign bond) market, especially at the long Asia ($5.5 billion) raised from a planned $100 million and end. The Republic of Colombia made its Others 1% Yen 12% priced at six-month LIBOR plus 120 bp. A debut with a 10-year, $250 million issue, [>5wfr7% first time rating of Baa3 by Moody's report- priced at 148 bp over comparable US edly boosted investor interest. Treasuries. The issue was placed mostly with us dollars 80% US institutional investors. Argentina's YPF U EMERGING-MARKET ISSUERS CONTINUE launched its first issue in this market, a 10- TO ACCESS THE YEN MARKET year, $350 million offering. The issue, which DM 2% As Japanese investors cautiously turn toward was priced at 232 bp over Treasuries, was emerging markets, some borrowers are look- reportedly substantially oversubscribed on V ing to tap this source of funds. At $1.62 bil- strong demand from US institutional lion, yen-denominated issues accounted for investors. The Bank of China's $500 million, us dollars 98% nearly 12 percent of all bonds offered. Asian two-tranche issue was the third Yankee issue borrowers financed 12 percent of bond from the country. The five-year, $400 million Source: Euromoney EBndware issues in the yen sector (figure 3), and bor- tranche was priced at a spread of 98 bp over Treasuries, and the 20-year, $100 million FIGURE 2 tranche had a launch spread of 135 bp. BOND ISSUES FROM DEVELOPING COUNTRIES, BY MATURITY U ASSET-BACKED SECURITIES GAIN US$ billions * Over IS years SOME FAVOR 3 11-1Syears Two securities backed by credit card receiv- El1 6-10 years ables were issued. Mexico's Banco Serfin 13.6 * 1-5 years issued $172.1 million of seven-year participa- tion certificates, and Banco Union of Venezuela offered a four-and-a-half-year, $48.7 million note. Both issues were placed with US institutional investors. The market could see more such deals as less creditwor- thy issuers try to provide credit enhance- 1993Q4 1994Qi ments to investors. Early in the quarter, the Source. Euromoney Bondmae. Republic of Congo entered the international MAY 1 994 7 market (for the first time) with a securitized fourth quarter. But historically low bond offering. yields kept refinancing activity high and also prompted other borrowers to lock in favor- k' CORPORATE BORROWING IN LOCAL FIXED- able interest rates. As investors sought higher INCOME MARKETS RISES yields, they shifted into longer maturities and Domestic fixed-income markets in develop- higher-risk non-OECD bond issues. ing countries are dominated by government The US dollar remained the most popu- securities, and the local bond market for cor- lar currency of issue for straight bonds, and porate borrowers is typically small. But some this sector gained some market share at 39.4 of these markets are seeing growth. The first percent. The euroyen market, because of liq- medium-term note program for an Eastern uidity, lower cost, and ease of issue, attracted European borrower was established for Japanese borrowers. Anticipating a rush of Hungary's Investel, the financing subsidiary new issues, foreign borrowers entered this of the national telecommunications com- market ahead of the easing of the lockup pany. The 5 billion forint facility will be used period (a 90-day trading restriction) on new to raise capital in the domestic and interna- issues (by sovereigns). The straight yen sec- tional markets. In Poland, the first fixed-rate tor's share was boosted by 1.6 percentage zloty corporate bond was offered, a three- points in the quarter. Activity in the straight year, 100 billion zloty issue. deutsche mark sector was higher because of big issues by international institutions and investors' moving toward the longer end of GLOBAL BORROWING the yield curve. At 9.2 percent, straight French franc bonds gained market share, but M INTERNATIONAL CAPITAL MARKET straight sterling issues continued to fall (to ACTIVITY WAS AT A RECORD HIGH IN 1993, 6.7 percent). THANKS TO LOW INTEREST RATES According to the OECD, $206.7 billion was E NEW SYNDICATED LENDING FELL IN THE raised on international capital markets in the FOURTH QUARTER OF 1993, ON A last quarter of 1993, pushing the total for the SLOWDOWN IN REFINANCING ACTIVITY year to a record $810.5 billion, up 32.9 per- Gross new syndicated loans in the fourth cent on 1992 (table 3). At $117.8 billion, quarter were $21.9 billion, down 36 percent gross bond issues were up 1.3 percent on the on the previous quarter. For the year, inter- previous quarter and 39.2 percent higher year on year. Straight bonds continued to be TABLE 3 the most popular instrument for interna- INTERNATIONAL CAPITAL MARKET tional issuers, but their share in total bond FLOWS issues slipped to 81 percent in the quarter as us$ billions investors, anticipating a bottoming of US Instrument 1989 1990 1991 1992 1993 Bonds 255.7 229.9 308.7 333.7 481.0 short-term interest rates, moved into float- Equity 8.1 7.3 23.4 23.5 40.7 ing-rate instruments. Medium-term note and Syndicated loans 121.1 124.5 1 16.0 117.9 130.1 eurocommercial paper facilities were sharply Nack andclties 8.4 7.0 7.7 6.7 8.2 higher in the fourth quarter. ECPb and other non- Despite a sharp contraction in sovereign underwritten facilities 73.2 66.2 80.2 127.9 150.5 issues, low interest rates helped keep bond Total 466.5 434.9 536.0 609.7 810.5 offerings buoyant. Completion of budgetary Flows to developing countries' (percent) 5.7 7.6 9.1 8.0 11.2 funding programs in earlier periods and a. Note issuance facilities. reduced need to build up reserves prompted b. Eurocommercial paper. c. Including Eastern European countries. a sharp decline in sovereign borrowing in the Source: OECD, Finonciol Market Trends. 8 FINANCIAL FLOWS AND THE DEVELOPING COUNTRIES INTERNATIONAL. LENDING AND CAPITAL MARKETS national credits were up 10.3 percent, at interbank business, apparently reflecting $130.1 billion. With refinancing operations temporary factors, including tensions in the of more than $60 billion, however, new vol- ERM. By contrast, net international bank untary syndicated lending was at its lowest credit (or new lending), adjusted for rede- level since 1986. Syndicated lending (exclud- posits, rose a mere $5 billion, a two-year low. ing refinancing) has been kept low by the New syndicated credit facilities were also shift toward financing in securities markets lower at $54.1 billion, reflecting weaker bor- as a cost-effective alternative, continuing low rowing by US and other OECD borrowers. demand from blue-chip borrowers because With Japanese banks returning to the of protracted weakness in many major indus- international interbank market as deposi- trial countries for most of 1993, and banks' tors, seeking returns higher than available continuing caution. Lending to developing in the local market, their international Asian economies fell in the fourth quarter, claims (not adjusted for exchange rate but for the year, lending to this region grew changes) rose by over 5 percent. French by 27 percent-to $12.4 billion. banks' claims were also higher (by 7.1 per- According to the OECD, average interna- cent) as these banks on-lent funds borrowed tional bank loan spreads stagnated at 85 basis from securities markets and other sources to points in 1993, although credit terms for the international interbank market. Inter- high-quality borrowers eased as banks com- national claims of US banks were marginally peted to lend to them. OECD borrowers saw higher. spreads fall to 81 bp from 86 bp a year ago, while developing-country borrowers' spreads i BIS BANKS' EXPOSURE TO DEVELOPING widened 20 bp to 106 bp. The average matu- COUNTRIES FELL IN THE THIRD QUARTER OF rities were lower at five years and six months 1993, ON A WIDESPREAD RETRENCHMENT in 1993, compared with five years and nine BIS banks' outstanding claims (adjusted for months in 1992. exchange rate changes) on non-OPEC devel- oping countries, OPEC, and Eastern Europe * RECORD INTERNATIONAL EQUITY ISSUES and the former Soviet Union were down $6.2 IN 1993, THANKS TO PRIVATIZATIONS billion in the third quarter, compared with a International issues on developed stock mar- nearly $400 million rise in the previous quar- kets rose to $16.1 billion in the fourth quar- ter. Claims on non-OPEC developing coun- ter of 1993, and were a record $40.7 billion tries rose by $590 million, following a $3.7 for the year-up 73 percent from a year ago. billion increase in the second quarter. BIS At $8.9 billion, privatizations accounted for banks' claims on Eastern Europe and the for- 22 percent of international equity issues. mer Soviet Union fell by $1.4 billion and Fund-raising by US corporations was also those on OPEC countries by $5.4 billion. behind the record-high issues. Lending was concentrated in major developing countries in Asia, but even there, credit activity was uneven. New lend- COMMERCIAL BANK CLAIMS ing to Thailand continued to grow strongly, with claims rising by $2.2 billion, following a * IN THE THIRD QUARTER OF 1993, BIS $2.5 billion rise in the previous quarter. BANKS' CROSS-BORDER CLAIMS REBOUNDED Credits to China slowed, however, and Cross-border and local foreign currency claims rose by only $76 million, compared claims of BIS reporting banks climbed by with a rise of $3.7 billion in the second quar- $183.2 billion in the third quarter of 1993, ter. Claims on Malaysia were also higher (up outpacing the decline of the preceding three $745 million), but claims on Korea and the quarters. The rebound was due to a rise in Philippines fell. MAY 1994 9 'NTURNATIONAL LEhlDDNG AND{ CAPITAL MARKETS With commercial banks remaining cau- after an absence of two years, obtained a tious in extending loans, other than for seven-year, $500 million syndicated loan short-term trade financing, BIS banks' claims (raised from $400 million) for general fund- on other non-OPEC developing countries ing purposes. were mostly lower. Claims on Latin America A 15-year, $120 million syndicated loan contracted by $928 million, with Mexico and for China is being supported by the World Brazil experiencing the biggest declines- Bank's Expanded Cofinancing Operation $578 million and $542 million, respectively. (ECO). The ECO-guaranteed facility, which At $5.4 billion, the decline in claims on will guarantee principal repayment on and OPEC countries was much larger than the beyond 10 and a half years, has extended the previous quarter's $3.3 billion fall. Eastern loan maturity available to China in the syndi- Europe saw a contraction in claims (of $1.4 cated credit market. Elsewhere, Mexico's billion) led by a $1.1 billion decline in claims Pemex is looking to tap the syndicated loan on Hungary (most of the contraction was due market for its large financing needs, and to reclassification of assets). Claims on Hungary's Budapest Bank is hoping to obtain Middle Eastern and African countries were a medium-term syndicated loan for a also sharply lower, by $463 million and $410 Hungarian corporation. million, respectively. The withdrawal of funds from BIS report- ing banks by developing countries slowed in MARKET CREDITWORTHINESS the third quarter of 1993, although trends across developing regions were mixed. i GREATER INTEGRATION WITH Deposits of Malaysian residents climbed by INDUSTRIAL-COUNTRY MARKETS BOOSTS $6.3 billion, shifting the country to a net DEVELOPING-COUNTRY CREDITWORTHINESS creditor position. Chinese deposits were also Institutional Investor' s biannual survey of coun- higher-by $ 1.1 billion. Deposits by Egyptian try credit reports that greater integration with residents were sharply higher, up by $1.2 bil- industrial-country markets has improved lion. The buildup in deposits from the for- developing-country risk. Investors are inter- mer Soviet Union slowed, rising by $318 preting the move by developing countries to million, compared with a $9.3 billion rise in open up markets, gain access to foreign the preceding four quarters. By contrast, funds, and attract foreign capital as reflecting OPEC residents continued to draw down a greater willingness to meet financial obliga- deposits (by a further $7.7 billion) to finance tions. This is especially so for newer instru- budgetary needs. Deposits of Latin American ments used by developing-country borrowers residents continued to fall (by $3 billion), on to raise funds in international financial mar- repatriation of funds to the region. kets. The better ratings are a reflection of a generally favorable shift in investor sentiment * BANK LENDING CONTINUES TO FOCUS toward emerging markets, although there is ON ASIAN ECONOMIES some evidence that the improvement in rat- Syndicated lending is available to only a few ings could be the result of declining indus- countries (those with higher credit). Devel- trial-country creditworthiness. oping Asian economies continue to receive In Latin America, Institutional Investor's the bulk of these credits, although there were survey shows a strengthening of country some project-related deals for the Middle credit on strong prospects stemming from East in the first quarter. Malaysia and market-oriented reforms, debt reduction Thailand received large project-related efforts, and global factors, including the finance for energy projects. Indonesia, which conclusion of GATT. The regional ratings returned to the international credit market (on a scale of 0 to 100) rose 1.4 points to 25.8 10 FINANCIAL FLOWS AND THE DEVELOPING COUNTRIES INTLEFNATiONAL LENDING AND CAPITAL MARKETS on broadly based gains, anl -year high (fig- economy helped the country to climb 1.6 ure 4). Argentina led the way with a three- points. Despite high growth and large capital point rise, followed by Peru (up 2.5) and flows, China's rating rose only 0.7 point. Barbados and Chile (up 2.1 each). An In Eastern Europe, the stronger credit rat- unchanged credit rating halted Venezuela's ings improved while the weaker credit rat- slide, while Brazil showed a gain in ratings in ings declined. Slovenia's credit rating shot both Institutional Investor and Euromoney up 4.8 points, the largest increase in Institu- surveys. tional Investor's survey. The Czech Republic Ratings of the Middle Eastern economies also posted a large gain (up 3.1), as did rose 1.3 points to 39.5 (according to Poland (1.9 higher) and Hungary (up 1.3). Institutional Investor). Improved prospects for Among the former Soviet republics, Ukraine, peace buoyed ratings for Israel (up 2.9), Lebanon (2.7 higher), Egypt (up 2.3), and FIGURE4 ordan (up 1). Other large gainers included INVESTOR RISK RATINGS, Jodn u 1.MARCH 1990-MARCH 1994 Cyprus, which continues to rack up gains as East and South Asia an offshore center, and Kuwait (up 2.3 points so each) and Oman and Qatar (higher by 1.8 40 - ................................................ points each). Iran's credit rating slipped a further 1.6 points. 20 African countries continued to post small gains in creditworthiness. Institutional - 7: 0- Investor s regional average rating climbed 0.4 Mar Sep Mar Sep Mar Sep Mar Sep Mar point to 20.7 (excluding newcomers), with 1990 1991 /992 1993 1994 the number of gainers outpacing countries Eastern Europe experiencing a rating decline almost two to 40 one. Good economic performance helped 30 -- : -- - -. Mauritius and Botswana to notch up further 20 gains of 2.3 and 1, respectively. Some coun- 10... . tries showed big improvements in creditwor- 0 thiness, including Tunisia (up 2.6), Morocco Latin America and the Caribbean (2.4), and Seychelles (2.3). Political difficul- 30 --------------------------------------------------------------- ties appear to have pushed down Angola's 20 ----- - - ---- rating by 1.9 points, and caution ahead of 10 ' - -- , N national elections kept the increase in South 0 Africa's rating to under 1 point. Ratings of East and South Asian 30 A-ric- economies rose a further 1.1 points to 38.9 on continued favorable sentiment for and investor appeal of the fast-growing econo- mies in the region. The Philippines led the pack with an increase of 2.5 points on posi- Middle East tive news and progress on economic reforms. 40 Viet Nam again saw a large rise (up 2.4 30 points), fueled by prospects of rapid eco- 20 r nomic growth in the country, and Sri Lanka 10 --- ---- 5 climbed 2.2. Malaysia rose 1.8 points on 0 expectations of continuing strong perfor- Note Scaeis0 to 00o slowest, IOOs highest Source: Instit,ton l nvestor. vanou.sIss,,es. mance, while India's moves to liberalize the MAY 1994 11 * " 0 ,0 '\ " j . N " i''''.g. .'- ,'r ............. ,tl-.' \ ......MARK - i. TABLE 4 Georgia, and Belarus fell by 3.1, 2.8, and 2, serve as a sovereign ceiling for Malta's for- SOVEREIGN FOREIGN respectively, on economic factors and politi- eign currency debt. S&P also assigned an CURRENCY DEBT cal concerns. implied long-term foreign currency rating of Long-term rating AA- to Cyprus, and gave the Slovak Republic Moody's' S&Pb' . INDONESIA GAINS A FIRST-TIME RATING a rating in the first quarter. The BB- rating by Investment grcde FROM MOODY'S, AND CHILE RECEIVES ITS S&P was assigned to the National Bank of Chile BOaa2 BBBE+/ SCN NETETGAERTN AA.M SECOND INVESTMENT-GRADE RATING Slovakia's long-term foreign currency debt. Ch na A3 BBB2 In March, Indonesia's long-term foreign cur- S&P has assigned an investment-grade rating Colombia Bal BBB- Cyprus n.a. AA-2 rencydebtwasratedBaa3 (investmentgrade) of BBB to the city of Prague. This is the first Czech Republic Baa3 BBB by Moody's (table 4). The rating, which was time that a municipality in central Europe Indonesia Baa3 BBB-' assigned to the Republic's US-dollar- has been rated. Korea, Rep. of Al A+' denominated floating-rate notes issued in Malaysia A2 A/ AA-1' 1986 and maturing in 2001, reflects the coun- U LOWER RATINGS ASSIGNED TO TURKEY PMotugal A2 A try's strong progress in economic growth and AND VENEZUELA AMA' poverty reduction. Moody's rated Chile's In January, both Moody's and S&P down- Thailand A2 A-' long-term foreign currency debt Baa2 (invest- graded Turkey's long-term foreign debt-to Below mnvestmnent grrde Argentina B Ia BBe 2 ment grade), and Standard & Poor's raised by Bal (below investment grade) and BBB-, Hungary Bal BB+2 one notch Chile's implied long-term foreign respectively. S&P followed with another india Ba2 BB+ Mexico Ba2/ BB+ currency debt rating to BBB+. The ratings downgrade in March to BB. The ratings Baal A-*2 reflect the country's improved economic fun- reflect the countryv's large fiscal deficits, Philippines Ba3 BB-' Sovakia n.a. BB damentals, arising from prudent macroeco- which have contributed to high inflation and Trnidad and nomic management. a widening current account deficit. Also in Tobago Ba2 n.a. Turkey Ba I BB Elsewhere, S&P assigned an implied A rat- the quarter, S&P downgraded Venezuela's Uruguay Bal BB+' ing to Malta's long-term foreign currency long-term foreign currency debt from BB to Venezue a BalI BB-' "The first rating appliesto foreign obligations, thanks to that country's good BB-, and Moody's placed the Republic's debt currencydebtand the second to economic performance, conservative macro- under review for a possible downgrade. The domestic currency debt. a. Not applicable economic policies, and growing economic ratings reflect a weakening of public finances a. April 6, 1994. March 28, 1o994. ties with the European Union countries. The and difficulties in implementing fiscal and I Stable outlook, 2. Positive outlook. Moody's A2 rating of the eurobond issued by economic reforms. the Freeport Terminal (Malta) Limited will E C,? l J X WY P*IS T2X FA`.0 Li '-' A, N i - E IN , D r R E . - j N V E ST M E N iT EMERGING STOCK MARKETS 17 percent inJanuary alone on profit-taking by foreign investors. Local investors, who w THE IFC'S DOLLAR-BASED COMPOSITE had pushed up the prices of second-tier INDEX FELL BY 9.4 PERCENT IN THE FIRST stocks with high upside potential, also sold QUARTER, LED BY A 14.3 PERCENT SLIDE IN heavily. Following abullish run in 1993, Thai THE ASIAN REGIONAL INDEX shares slumped 26.3 percent on a pullout by A sell-off by foreign investors on rising US foreign investors, who had poured an esti- interest rates and some profit-taking in the mated $4.5 billion into the country's stock first quarter of 1994 reversed the huge price market in 1993 (an eightfold increase over gains toward the close of 1993. Some big 1992). The Indonesian marketwas lower (by Asian emerging markets saw substantial 20.8 percent), also led by a withdrawal of for- losses, triggered by net foreign capital out- eign investors from the market. Local flows, followed by selling by domestic retail investors postponed investments, and a investors (figure 5). Malaysian shares tum- flood of new issues depressed prices further. bled 26.2 percent in the quarter-more than The Indian stock market racked up first- 12 FINANCIAL FLOWS AND THE DEVELOPING COUNTRIES quarter gains of 8.1 percent, despite prob- deteriorating market creditworthiness and lems associated with market settlement pro- developments in local currency and money cedures and a brokers' strike. Reforms have markets. The Polish stock market, which con- 1st boosted investor perceptions of India's cred- tinues to have a small supply of shares, see- Quarter itworthiness and attracted large investment sawed upward in the quarter, and 1994 flows. Investors are increasingly frustrated, Zimbabwe's market also ended the quarter =_ however, by the country's outmoded settle- higher (up 29 percent). IFCGprice ndex, percentage ment system, ill equipped to handle the large Since one Since last sums that foreign institutional investors have .r INDIA MOVES TO IMPROVE STOCK year ago quarter poured into the local stock market. SETTLEMENT PROCEDURES +45.3 -26.2 Although Korea's economic activity indi- India's existing stock settlement system was cators improved, its stocks advanced less than designed for small investors buying lots of 10 1 percent over the quarter. Anti-inflationary to 100 shares. Institutions typically purchase measures caused Korean stocks to slide after shares in lots of 100,000, however, and for- share prices had posted gains of 11.4 percent eign institutional investors, who have poured in January. For the first time since the mar- large sums into the Indian equity market ket's opening, monthly net investment flows (over $1.3 billion, net, since September to Korea's stock market turned negative in 1992), are finding settlement procedures February. cumbersome. To accommodate large Elsewhere, Pakistan's market advanced 11 investors, the Securities and Exchange Board percent and Sri Lankan shares rose 20.7 of India has recently approved transfer deeds percent. By contrast, Chinese shares fell 23.6 and share certificates for transactions of percent. A deluge of new issues and tight 1,000-share lots. credit conditions dampened the A-share mar- ket, poor corporate earnings pulled down the market for B-shares, and rising US interest FIGURE 5 C1 El Ist rates weakened the prices of H-shares. EMERGING STOCK MARKETS Since one Since last Quarter In Latin America, a perception of IFCG pnce index, percentage change in US$ year ago quarter 1994 improved economic prospects fueled a 36.9 a. m_ percent rise in the Brazilian stock market. Foreign investment in Brazil's capital mar- +72.4 kets-mostly in shares-was more than $1 +47.l +43.7 billion (net) in January, compared with $5.5 +8.1 billion for the whole of 1993. At price- __9.9 __208_ -2 earnings multiples of under 20, foreign '~~~C . . investors apparently viewed the Brazilian market as being cheap (on a potential earn- + 73.8 ings basis) and reportedly reweighted port- folios in favor of that country. Most other +27.l +28.3 Latin American markets also posted gains, +0.8 -12.4 -15.8 with smaller markets reporting larger price gains. Colombia's stock market rose 47.2 per- . cent, and Peru's was up 22.7 percent. An +46.8 exception was Mexico, which saw share +33.3 prices slip 12.4 percent in the first quarter. +9.5 n + 10.3 Elsewhere, Turkey's stock market 26.3 -55.0 declined sharply, ending the quarter 55 per- -___-___l_l cent lower. Investor sentiment plunged on So-rce. ntemat-ola F5nance Corporat-on data. MAY 1994 13 EQLITY POCRTFOL10 AND FOPREiGN E>11RECT ;NVESTMENT In Chile, financial reforms will lift the ceil- Grupo Tribasa's $376 million ADR and ing on pension funds' foreign equity invest- Empresas La Moderna's $171 million ADR), ments from 3 to 12 percent, although the Grupo Modelo was able to raise $530 million increase will be put into effect gradually over through an entirely domestic offering. the next few years. In a move to improve mar- Foreigners purchased many of the shares, ket efficiency, Colombia's securities and however. Ist exchange commission has introduced a liq- Large state-owned Chinese companies ;Qurter uidity index. The index ranks stocks of continue to rely on international offerings to domestic companies listed on the exchange raise funds. China's Yizheng Joint -- IKGpn ce index according to such factors as trading volume Corporation offered 1 billion H-shares (val- iFCG price index, percentoge change and number of transactions. In a move to lib- ued at $307 million). This was the seventh of in US$ eralize financial markets, China's Shanghai the nine H share issues targeted in the first yiear aono quSrter stock exchange is planning to allow foreign round of corporatization (which began in + 112.1 +36.9 securities firms membership on the June 1993). Another 22 state-owned compa- exchange. Presently, foreign securities firms nies have been approved for a second round have seats on the exchange and are allowed of offerings. Elsewhere in the region, to trade in the B-share market. Indonesia's PT Gadjah Tunggal raised $539 million through the largest offering by an Indonesian company: a $235 million inter- NEW EQUITIES, QUASI- national tranche, which was placed in Asia EQUITIES, AND DERIVATIVES (45 percent), Europe (35 percent), and the United States (20 percent), and a $304 mil- U EQUITY ISSUES REINED IN BY WEAK lion one-for-one rights issue. MARKET CONDITIONS The quarter also saw Brazilian firms tap- Weakconditionsin international equitymar- ping international equity markets. The first kets spilled into local markets, holding down major international offering by a Brazilian international equity issues by developing- company received a good reception. country firms (to $4.1 billion). Both estab- Companhia Energetic de Sao Paulo's (CESP) lished issuers and new entrants are looking $300 million ADR issue (through a Rule 144a to tap the international equity markets. The placement) was oversubscribed and a green- early part of the quarter, however, saw mod- shoe option was exercised. Another Brazilian erate issuing, led by Indian and Mexican companies (figure 6). Thanks to India's FIGURE 6 commitment to liberalizing its economy, INTERNATIONAL EQUITY ISSUES BY Indian companies have been increasingly DEVELOPING COUNTRIES US$ billions able to tap international equity markets. In 11.2 one week, the markets absorbed five issues totaling nearly $300 million. Foreign U LatiAmerica investors have favored depositary receipts as * Asia an investment vehicle for Indian stocks, because these instruments allow foreigners to avoid some of the structural problems in 4.2 4.1 the local market. Premiums on Indian GDRs, which had risen to 35 percent on strong investor demand, collapsed in recent months because of cyclical global factors. Although Mexican companies continue to 1993 1993Q4 1994Q1 raise funds through ADRs (for example, Source Euromoney Bondware. 14 FINANCIAL FLOWS AND THE DEVELOPING COUNTRIES EQUITY PORTFOLIO AND FOREIGN DIRECT INVESTMENT company, Companhia Vale do Rio Doce, fol- other Latin American borrowers. Elsewhere lowedwith a $150 million ADR. Among other in the region, the first closed-end fund to DEVELOPING firsts was a $33 million GDR offering by a Sri invest exclusively in Argentine securities, the COUNTRIES' BEST- Lankan corporation, John Keells Holdings, Argentine Fund Incorporated, is planning a CLOSED-END FUNDS and an ADR by a Jamaican hotel developer, global public offering. A $100 million closed- Percent Ciboney. end fund, the Latin America New Growth Average Fund, will invest in small and medium-size return Market l994Ql STOCK MUTUAL FUNDS PERFORMED companies with high growth potential. 34. POORLY IN THE FIRST QUARTER OF 1994 Brazil (3) 34.a The stream of new Indian funds contin- Portugal (5) 21.01 After posting strong gains last year, stock ued in the quarter. Elsewhere in the region, Pakistan (3) 12.25 India (7) 10.66 mutual funds lost 3.3 percent in the first the Regent Moghul Fund is planning to Emerging Europe (6) 6.06 quarter of 1994 (according to Lipper). This invest in equity-related instruments in Chile (4) 3.05 Latin America (I I) 2.82 was their worst performance in three and a Bangladesh and Pakistan. The Sri Lanka Korea(I5) 0.20 half years. Emerging-market funds were Growth Fund, the second for that country, EmergingGlobal (15) -7.15 Mexico (2) -9.76 among the biggest losers, down 7.5 percent, successfully closed with $51.5 million. Two Asia(19) -14.50 with the Pacific region funds off 11.5 percent emerging Europe funds-Baring Emerging Indonesia(12) -14.57 Middle East (l) -18.60 (tables 5 and 6). Even so, some new funds Europe Trust ($124 million) and Central Thailand (13) -20.08 were launched. European Growth Fund ($200 million)-will Philippines (4) -20.30 China (1 3) -23.03 invest in the Czech Republic, Greece, Malaysia/Singapore (6) -25.08 * AFRICAN STOCK MARKETS ATTRACT FUNDS Hungary, Poland, Portugal, Turkey, and pos- Turkey (2) -54.37 Some African funds were launched in the sibly other Eastern European markets. A Note Figures in parentheses are number of funds in category. first quarter, raising nearly $400 million. $761 million fund, the AIG Asian Source: Lipper International Closed- End Funds Service, Although the risks are high, investors (espe- Infrastructure Fund LP, will invest in infra- cially US) are betting on the upside potential structure projects in China (up to 50 per- associated with the opening up of African cent) and other Asian countries. markets. Because of thin markets and lack of A global fund, Alliance Global Privati- standard custody services, however, funds zation Fund, raised more than $1 billion COUNTRY FUNDS: will focus on South Africa and assign a small from US (80 percent) and other investors in ToP FIVE weight to other African markets. The the first quarter. A Peru privatization fund is EISCOUNTS AND Morgan Stanley Africa Investment Fund, planning to raise $250 million; it hopes to Percentage difference between net which raised about $230 million, will initially invest in state-owned companies up for sale asset value and share pnce invest in Morocco and South Africa (the only in the mining, oil and gas, power, fishing, Percentage two markets in the region that meet US cus- and manufacturing sectors. Largest discounts tody standards). The Southern Africa Fund China & Eastern and the New South AfricaFund ($90 million * EQUITY-LINKED INSTRUMENTS AFFECTED InvestmentCo. Ltd. 42.17 BY FALLING STOCK MARKET PERFORMANCE Korea China Super and $71 million, respectively) plan to invest BY FALLING STOCK MARKET PERFORMANCE Fund Ltd. -34.74 mostly in South African equities. AND VOLATILE MARKETS Thailand Intemational mosfly ~~~~~~~~~ ~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Fund Ltd. -32.33 Latin equity markets also saw new fund Sliding stock prices, as well as rising interest Thai-Euro Fund Ltd. 29,75 activity. A survey (by Micropal Emerging rates, constrained developing-cotintry firms Thai Prime Fund Ltd. -29.29 Market Fund Monitor) of 61 of the largest looking to lower funding costs through Largest premiums Turkish Investment global emerging-market equity funds, with equity-linked financing. A softening market Fund Inc, 54.32 total assets at the end of 1993 of $20.2 billion, (from large sell-offs by foreign inivestors) Indonesia Fund Inc. 20.40 Ch na Fund Inc. 17.52 found that about 40 percent was invested in widened discounts on convertibles, espe- Turkey Trust PLC I7.30 Latin America. Among the new funds cially Thai convertibles, and forced some Morgan Stanley Emerging Markets Debt Fund Inc. 1 6.55 launched in the quarter was the $280 million emerging-market borrowers to postpone NoteAs Db March3n, 19. open-end mutual fund Inverlatin Dollar planned issues. Saturation in the US dollar Source: Lpper Intemational Closed- Fund. It will invest in short-term dollar and sector saw borrowers shifting into the Swiss End Funds Service. dollar-linked paper issued by Mexican and franc sector. The Swiss franc market for MAY 1994 15 Y-Q 'l_ TCys?RiTFOC_!O AND FOREIGN DIRECT INVESTMENT Asian equity-linked securities totaled about issued on telecommunication shares. Two $650 million in one week alone. baskets of one million call options each on Among Asian borrowers, there is a broad- telecom shares from Hong Kong, Mexico, ening of the range of countries tapping the and Brazil (25 percent each), as well as from market. Malaysian convertibles picked up Chile and the Philippines (12.5 percent after a hiatus of two years. After almost three each), were offered. Another issue of one years, Indonesia also returned to the con- million call options comprised Latin vertible bond markets with an exchangeable American telecom shares (from Argentina, bond. PT Indo Food, the country's largest Brazil, Chile, and Mexico). Call options were food manufacturer, offered a five-year, $500 also issued on baskets of Czech and million bond exchangeable into shares of an Hungarian stocks. Warrants were issued on initial public offering. The structure of the baskets of Eastern European and Russian deal was driven in part by local market regu- debt and on Brazilian debt. lations that restrict the price of new equity to 15 times earnings. An easing of conditions for securities issues in overseas markets FDI AND PRIVATIZATION boosted convertible bond issues by Korean entities. Foreign investor demand for Korean U FOREIGN DIRECT INVESTMENT IN equity-linked paper was strong due to the DEVELOPING COUNTRIES PROJECTED TO country s improving economic performance GROW MODERATELY IN THE MEDIUM TERM and a ceiling (of 10 percent) on foreign par- A recent United Nations study forecasts that, ticipation in the stock market. although FDI flows to developing countries Convertible issues by Latin American com- will continue to grow in the first half of the panies rose. Empresas ICA became the first 1990s, the growth will not be as explosive as Mexican company to issue a Yankee convert- in the 1980s. Latin America will see the ible, a $475 million bond (to be exchanged in fastest growth, at 12 to 18 percent. Flows to two tranches). The quarter also saw the first Asia could record a moderate 11 to 12 per- big convertible issue by an Argentine bor- cent, but the projected range for Africa is rower. Investor demand for Cointel's $320 much wider at 6 to 16 percent. Among fac- million offering of Prides (Provisionally tors found to significantly influence FDI Redeemable Income Debt Exchangeable for inflows were the size of the host market (as Stock, which are convertible into Telefonica represented by GNP) as well as its growth. de Argentina stock) was strong. * SOME COUNTRIES REPORT PROGRESS IN * INVESTORS SEEK TO PROTECT EQUITY PRIVATIZATION RETURNS WITH OPTIONS In the largest international share offering US-listed options on Latin American ADRs from Africa, the Ghanaian government is continue to grow as investors look to protect offering over 25 percent of its stake in returns by using options in hedging strate- Ashanti Goldfields; almost 5 percent will be gies. Telmex is the second most actively sold domestically. Ashanti is 55 percent gov- traded equity option in the United States. ernment-owned, 45 percent private. Other US-listed equity options include those Peru's privatization program received a on Argentina's YPF, Brazil's Aracruz boost with the sale of the telecommunication Celulose, and Chile's Compania de companies Compania Peruana de Telefonos Telefonos de Chile. and Entel-Peru. In March, Peru's The quarter saw strong foreign investor Commission for the Promotion of Private demand for Latin American and Asian equity Investment (Copri) announced rules for the warrants. There were three call warrants use of debt in privatization: the principal 16 FINANCIAL FLOWS AND THE DEVELOPING COUNTRIES . *,. '' t '- '' - - rLia;i-1.'REC7 FNVEStMENT amount of loans will be accepted at face investors not participating. Morocco sold value, but interest arrears will not be allowed 1.2 million shares (nearly 340,000 interna- in debt-equity swaps. Only about $10 billion tionally) of Cimenterie de L'Orientale of the $23 billion in debt will be eligible for (CIOR). Colombia successfully completed participation in privatization. the sale of Banco de Colombia in January. Other countries report progress in privati- Malaysia's Petronas Degangan was offered for zation. The Turkish government followed the privatization. The Czech Republic is offering sale of its 15.3 percent stake in Northern about 860 companies for sale under the sec- Electric Telekomunikasyon (Netas) with the ond phase of its privatization program. sale of 17 percent of Turk Otomobil Fabrikasi Hungary has begun a mass privatization pro- (Tofas). Foreign demand for the interna- gram, Russia's is continuing, and Kazahkstan tional tranche was strong, but domestic hopes to attract foreign investors to its sell-off demand was weak, with local institutional of state-owned enterprises. L ~~~ DEBT Z THE MARKET FOR DEVELOPING-COUNTRY below 70 cents to the dollar in the first quar- DEBT TUMBLES ON RISING INTEREST RATES ter, levels not seen for over 12 months. US long bond yields, rising to over 7 percent, Despite positive economic news and strong prompted investors to sell off developing- prospects, Argentine pars slipped 17 cents to country debt, mirroring a trend in other 52. A steady decline in Venezuelan debt fixed-income markets. Debt prices, especially prices resulted from market perception of of longer-dated and fixed-rate instruments, worsening credit risk, weak fundamentals, plunged as higher interest rates weakened and concerns about the strength of the finan- the attractiveness of these instruments (fig- cial sector following Banco Latino's collapse. ure 7).J.P. Morgan's Emerging Market Brady Pars were down 25 cents, to end the quarter Bond Index (EMBI) fell 18.6 percent in the at 49. Brazil's IDUs ended the quarter first quarter, 11.4 percent in March alone. higher, buoyed by passage of a conservative Countries with weak fundamentals suffered the largest declines. Spreads on Mexican FIGURE 7 pars widened from under 200 bp at the end SECONDARY MARKET PRICES, 1990-94 Percentage a/face va/ue of December to over 380 at the end of the 80 quarter. Those on Argentine pars more than doubled during this period, to over 700 bp, and Venezuela saw a widening of spreads by 70 - - l more than 800 bp (a 165 percent increase). Brady Market volatility intensified on sell-off 60 activity. After doubling to almost 19 percent T----- (annualized) in February, the one-month volatility of the EMBI registered a record s0 - ' - - - high of 23 percent in March. As investors sought to unload positions, market liquidity 40 problems surfaced, and quotes on some issues reportedly were unavailable. Along with rising US interest rates, politi- 30 - - -. cal events in Mexico also pulled down the sec- _ _ MMOa ondary debt market. Mexican pars dropped Source Table A.8 17 SECONDARY MARKETS FOR DEVELOPING-COUNTRY DEBT priced in the 50s last fall and the 20s a year FIGURE 8 SECONDARY MARKET PERFORMANCE OF LATIN EUROBONDS, ago, reportedly rose to 80 in the quarter. Viet APRIL 1993-MARCH 1994 Nam's loans, estimated at $400 million Retum index: December 31, 1992 = 100 (according to LDC Debt Report), are denomi- nated mostly in deutsche marks. Up 2 cents, Latini Eurobond Index C6te d'Ivoire's debt also gained in the quarter. 0 SECONDARY MARKET FOR NEW ISSUES '""""""').'$ \sS Government Bond IndeSLIDES ON US INTEREST RATE RISE ;, _4,. ........ ,^ \ ...i iGovemmnent Bond Ind S&P 500 The secondary market for developing-coun- - try new issues also saw falling returns and a widening of spreads. J.P. Morgan's Latin Eurobond Index, which tracks the perfor- /00 i mance of the liquid section of this market, E ;IJEJjijflI fell 3.4 percent in March (its largest one- 1993 1994 month loss) and 5.4 percent for the quarter Note: J.P Morgan's Latin Eurobond Inden and US Government Bend Index. Source: j P Mcrgan (figure 8). Over the same period, the return on US government bonds was -3.1 percent budget in Congress and by investors' antici- and that on US stocks -3.8 percent. While pation of a near-term conclusion of a Brady- secondary market spreads widened on all style debt reduction operation. issues, those on weaker credits widened Among the potential debt restructuring more. countries, Peru's 26 percent rise (of par) in the fourth quarter of 1993 was almost U EMTA WANTS TO STANDARDIZE THE entirelywiped out in the first quarterof 1994. TRADING SYSTEM FOR DEVELOPING- Investors reacted unfavorably to slow COUNTRY BONDS AND LOANS progress on a commercial bank debt agree- As a wider range of investors (especially US ment and exclusion of interest arrears in institutional) have entered secondary mar- debt-equity swaps. Peru's debt fell 11 cents in kets for developing-country debt, liquidity one week alone. has improved and trading volumes have bal- Elsewhere, Panamanian debt saw a 7 per- looned. In 1993, volumes were estimated at cent (of par) decline in prices, and Ecuador's $1.37 trillion (according to a survey of own- debt fell 12 percent (of par) to 40. Propelled firm trading by Latin Finance), almost twice by investor concerns over implementation of the levels a year ago. Volumes were especially economic policy reform in Russia, Vnesheko- high in the fourth quarter of 1993. nombank debt fell from highs of more than A computerized trade-clearing system 50 cents last December to end the quarter at would provide uniform pricing and market under 30 cents. trading (that is, volume) information to Poland's debt reduction agreement in market participants. Thus, the Emerging principle (in March) failed to rally prices; Market Traders Association (EMTA) is seek- instead, debt prices fell on a market correc- ing to standardize the trading system for tion. Poland's DDRA ended the quarter at developing-country bonds and loans. This 32, down 18 cents. At 35, Bulgaria's debt was would improve settlements by reducing time down 6 cents over the quarter. Vietnamese and paperwork. Currently, trades in bonds loans bucked the declining trend; the lifting clear through Euroclear, but that system can- of the US trade embargo on the country not be used for other trades, for example, in boosted prices. These loans, which were loans and options. 18 FINANCIAL FLOWS AND THE DEVELOPING COUNTRIES OFFICIAL FLOWS: MULTILATERAL AND BILATERAL MULTILATERAL FLOWS safety nets. Six countries have been added to the list of IMF members eligible for loans SUMMARY MEASURE U THE IMF UNVEILS AN ENLARGED under the enlarged ESAF-Armenia, OF TERMS OF COVER EN14NCEDSTRUTURA ADJSTMET uner te enarge ESA -Armnia, BY MAJOR EXPORT ENHANCED STRUCTURAL ADJUSTMENT Cameroon, Georgia, the Kyrgyz Republic, CREDIT AGENCIES FACILITY Tajikistan, and the former Yugoslav Republic Score Score After receiving "commitments and indica- of Macedonia. ML St tions" of SDR 6.5 billion for the enlarged Chile 82 85 . I 0 WORLD ANK LOANS T ACCELERATECh na 87 86 Enhanced Structural Adjustment Facility's U WORLD BANK LOANS TO ACCELERATE Czech Repubic 72 63 subsidy and capital accounts, the IMF DEVELOPMENT OF ARGENTINA'S CAPITAL Hungary 70 64 India 74 83 announced on February 23, 1994, that it will MARKETS Tunisa 74 84 begin operations under the enlarged ESAF. The World Bank approved two loans totaling Colombia 65 71 The indicated contributions are a little short $508.5 million to support faster development IMdorccoa 63 75 of the IMF's target of SDR 7.1 billion. The of Argentina's capital markets and facilitate Phi ippines 66 73 Po and 59 80 enlarged ESAF (a successor to the IMF's con- long-term lending for private sector invest- Romania 68 77 cessional lending facility, ESAF, which was ment. A $500 million loan will support a Zimbabwe 61 70 established in 1987) is financed by contribu- "backstop" facility, which will guarantee liq- Algeria 54 85 tions from both industrial and developing uidity to banks in the event of bond and Argentina 56 74 Ghana 55 64 countries. money market disruptions. The facility will Mexico 55 84 The enlarged ESAF has the same terms offer prime-rated commercial banks the South Africa 56 61 Venezuea 54 69 and conditions as its predecessor. The facil- option of selling US-dollar-denominated Brazl 44 61 ity will provide loans to low-income IMF securities to refinance bank debentures Egypt 36 91 member countries undertaking three-year issued to support long-dated loans. Pakistan 41 75 economic reform programs designed to Russia 49 66 improve balance of payments and strengthen U FUNDING FOR GLOBAL ENVIRONMENT Turkey 49 65 growth prospects. Loan terms under the FACILITY Angola 3 12 Bu garia 2 1 30 enlarged ESAF will continue to be highly In March, donors from over 80 industrial and C6te d'lvo re 16 78 concessionary, with a 0.5 percent annual developing countries agreed to provide Ec.uado 28 76 Iraq 0 0 interest rate and 10-year maturities with five more than $2 billion over three years to fund Kenya 17 47 and a half years' grace. The enlarged ESAF is the Global Environment Facility. Among the Nigeria 9 54 Peru 8 64 expected to pay greater attention to social new pledges are $430 million from the Forner Yugoslavia 23 27 United States, andJapan is expected to con- Note A of end-December 1993 a. Medium- to long-term. tribute about $400 million. The Facility had b. Short-term. TABLE 7 Source- World Bank and Beme MULTILATERAL DEVELOPMENT previously received $800 million for a three- Union datas BANKS: COMPARISON OF LOAN year pilot program in 1991. CHARGES, JANUARY 1, 1994 Percent 1DB ADB A/fB IBRD Lendingrates' 695k 6.67 7.62 727r BILATERAL ODA AND EXPORT 6.11a 7.25e RDT (vanable) (fxed) (variaboei CREDITS Spread on cost base 0.50 0.40 0.50 0 50Q Commitmentfee 0.75 0.75 1.00 0759 * JAPAN'S EXIM PROVIDES V58.9 BILLION Other service charge I 00 none none none IN UNTIED LOANS, AND THE UNITED STATES a. Variable and set semiannually; rate differential partly reflects the difference n the currency composition of the borrowing poo. ANNOUNCES A FUND FOR SUPPORTING b. Variab e lending rate. c. Variable ending rate appicabe to loans issued on or after May RUSSIA'S PRIVATE ENTERPRISES 18, 989. d. Fixed lending rate. The Export-Import Bank ofJapan approved e. Variable lending rate applicab e to loans made on or after July 1982. and before May 18. 1989. Y58.9 billion in five new untied loans and f. For borrowers el gible for interest rate waiver, the spread is 0.25 developing countries in the percent tor fiscal 1994. guarantees todeloigcutesnth g. A one-year reduction to 0.25 percent was approved by the first quarter. The loans included Y40 billion Board forfiscal 1994 Source: World Bank data. to the Bank of China for financing industrial MAY 1994 19 C)G :I L_ S: N1 U LA7ER LAJ L 0i A AAL AN . 73 cJLA. t AL projects in Hainan Province and Qingdao Enterprises in Russia will offer financing City. A Y6.3 billion untied loan to finance (equity, loans, technical assistance and train- telecommunications in Hungary was the first ing) to medium-size and large companies, cofinancing operation with the European especially those that have undergone mass Bank for Reconstruction and Development. privatization. The fund will focus on the few The United States announced a $100 mil- regions most active in implementing mass lion fund to finance large private sector privatization. enterprises in Russia. The Fund for Large [DEBT REL lEF UPDA-TE OFF IC I AL CREDITORS Toronto terms reserved for severely indebted low-income countries. Cameroon received * PARIS CLUB CREDITORS GIVE ENHANCED enhanced Toronto terms on current maturi- TORONTO TERMS TO SIX COUNTRIES, AND ties, but Houston terms (for severely RESCHEDULE THE DEBT OF THREE MORE indebted low-middle-income countries) on BetweenJanuary and April 1994, eight coun- arrears. All the agreements contain goodwill tries signed Paris Club agreements. clauses, wherein creditors agree in principle Cameroon, the Central African Republic, to hold a meeting after three years to con- Cote d'lvoire, Niger, and Senegal received sider the remaining stock of debt. Each enhanced Toronto terms (table 9). The Paris agreement requires the country to have an Club also rescheduled Kenya's arrears as of IMF program in place over the consolidation the end of December 1993 on debt con- period; this period ranges from 12 months tracted before December 31, 1991. Bulgaria for Niger to 37 months for C6te d'Ivoire. rescheduled debt with Paris Club creditors on standard terms, although with seven years' grace. Gabon's debt was rescheduled COMMERCIAL CREDITORS over 15 years with two years' grace. The five countries receiving enhanced U POLAND REACHES AN AGREEMENT IN Toronto terms have signed previous agree- PRINCIPLE ON RESTRUCTURING ments under the Paris Club, but this time COMMERCIAL BANK DEBT, AND BULGARIA (partly on account of the CFA franc devalua- ANNOUNCES THE TERM SHEET ON ITS tion) these countries were able to obtain BRADY-STYLE DEBT CONVERSION larger concessions under the enhanced In March, Poland reached an agreement in principle with its creditor banks on restruc- TABLE 9 turing its commercial bank debt. lJnlike PARIS CLUB RESCHEDULING AGREEMENTS, otherBrady-style debtagreements, the Polish J AN UARY -APR IL 1 994 JANUARY-APRIL 1994 deal does not provide rolling interest guar- us$ rmiiilons Cutoff Consolidation antees on either discount or par bonds. Country Date Amouint date period through Type Furthermore, the interest arrears bonds have Kenya Jan. 1994 535 12/31/91 arrears end-9 I Standarda Senegal Mar. 1994 237 01/01/83 12/31/95 ETT a long tenor ard slow coupon step-up. The Niger Mar. 1994 160 07/01/83 03/31/95 ETT options available to commercial bank credi- C6te dlvoire Mar. 1994 . 07/01/83 03/31/97 ETT Cameroon Mar. 1994 12/31/88 09/03/95 ETTb tors iclude: Bulgara Apr. 1994 .. 01/01/91 04/30/95 Standard * Thirty-year par bonds with principal col- Central African Rep. Apr. 1994 89 011/01,83 03/3 1/95 ETT lateralized by US Treasury zero-coupon Gabon Apr. 1994 07/0 1/86 03/3 1/95 Standard (modiSed) Notava.lable. bonds. Interest on these bonds will be paid a. Gradual payment schedule from 1995 to200 1 semiannually at 2.75 percent for years one b. Enhanced Toronto terms on current maturities only. Houston terms on arrears. Source: World Bank data. and two, 3 percent for years three through 20 FINANCIAL FLOWS AND l-iiE DEVELOPING COUNTRIES five, 3.5 percent for year six, 3.75 percent for * Interest reduction bonds with 18-year years seven through nine, 4 percent for years maturity and eight years' grace. Interest will 10 through 20, and 5 percent thereafter. be 2 percent for years one and two, 2.25 per- * Thirty-year discount bonds with principal cent for years three and four, 2.5 percent for collateralized by 30-year US Treasury zero- year five, 2.75 percent for year six, 3 percent coupon bonds and paying interest at LIBOR for year seven, and LIBOR plus 13/16 for years plus 13/6 percent. eight through 18. The bonds have a 12- * Past-due-interestbonds with 20-year matu- month rolling interest guarantee starting at rity and seven years' grace. These bonds will 2.6 percent and rising to 3 percent by year pay 3.25 percent initially and step up to 7 per- seven. cent by the ninth year. * Interest arrears bonds with 17-year matu- * Debt conversion bonds (or interest reduc- rity and seven years' grace. Interest will be tion bonds) with 25-year maturity and 20 LIBOR plus 13/16' Until the actual exchange years' grace. The interest rate on these will be takes place (scheduled for June 30, 1994), 4.5 percent in year one, 5 percent in years Bulgaria will continue to make a quarterly two through four, 6 percent in years five payment of $30 million. through nine, 7 percent in year 10, and 7.5 Bulgaria also plans to buy back a portion percent thereafter. Banks choosing the con- of its debt at 25346 cents to the dollar of the version option will be required to provide face value of both principal and interest. new money equivalent to $35 for $100 ten- dered for conversion. SE BRAZIL COMPLETES COMMERCIAL BANK * New-money bonds with 15-year maturity RESTRUCTURING ACCORD and 10 years' grace paying LIBOR plus 13/46* In mid-April, Brazil completed its Brady-style Banks will pay $35 of new money for $100 in debt restructuring, exchanging bank loans face value of eligible debt. for bonds. In March, most creditor banks had Also in March, the term sheet for a Brady- agreed to waive a clause requiring the coun- style restructuring of Bulgaria's commercial try to receive an IMF loan as a condition for bank debt was announced. The following the deal. menu of options is available to commercial Since June 1993, several debt operations banks under the agreement: under the Debt Reduction Facility for IDA- * Thirty-year discount bonds with principal only countries have been in preparation. collateralized by 30-year zero-coupon US Countries involved include Albania, Treasuries will be exchanged at 50 percent of Ethiopia, Guinea, Sao Tome and Principe, face value. Interest is LIBOR plus 13/6 with a Sierra Leone, Tanzania, and Zambia. 12-month rolling guarantee of 7 percent. BAN K CAP I TAL ADEQUACY quarter but substantially higher than the 0.77 percent of a year ago. At 16.34 percent, the 0 US BANK PROFITABILITY SLOWS, BUT return on equity was also lower than in the REMAINS HIGH; JAPANESE BANKS INCREASE third quarter, but almost 25 percent higher THE PACE OF LOAN WRITE-OFFS than a year ago. Net interest margins were Continuing improvement in asset quality wider at 3.15 percent, compared with 3.07 and cost saving yielded robust fourth-quarter percent in the previous quarter. The share of earnings for major US banks. The return on nonperforming assets contracted further, assets of the nine money center banks was and, at 2.28 percent, was 1.54 percentage 1.07 percent, down 10 percent on the third points below the level a year ago. MAY 19 4 21 COMMERCIAL BANK PROVISIONING AND CAPITAL ADEQUACY TABLE 10 In response to rising interest rates in the performing loans collateralized by property, RISK-WEIGHTED first quarter of 1994, some US banks have most in recent months. The discounts on CAPITAL RATIOS raised prime rates. The move is designed to loans have also widened in recent months. Percent, December 1993 Tier I Totol protect bank interest rate margins, which are Results for the year ending March 1993 Britain (£) high. The increase in bank lending rates is reportedly indicate a fifth year of declining Barclays 6.0 9.8 also supported by a surge in consumer loan profits forJapanese banks. LloaydWest 66 06 demand, especially in the last few months of UK banks are seeing improved asset qual- France (Ff) 1993. Moreover, commercial loans also ity and cost reductions (expense control), BNP 5.0 8.7 appear to have revived from their three-year but net interest margins are under pressure Credit Lyanna s 5.0 8.2 Paribas 7.6 9.0 decline. Despite a continuation of these from lower interest rates, and revenue Societ6 G6n6rae 5.0 9.1 trends, margins are likely to be squeezed as growth is subdued. Stronger economic Germony (DM) interest rates rise further. growth in the UK is expected to boost rev- Commerz 4.8 8.5 Deutsche 5.4 10.5 Portfolio problems have prompted enues. Elsewhere, German banks' 1993 Dresdner 5.9 9.1 Japanese banks to write off problem loans at results continue to be strong, although weak Bapan (y) 5 a faster pace. Much of the write-off has been corporate performance could affect the Bankof Tokyo 5.4 10.4 Dai-Ichi Kangyo 5.0 9.8 through sales to the bank-sponsored credit quality of loans. Nordic banks, which Sumitamo 5.6 8. Cooperative Credit Purchasing Company had been severely hurt by the recent collapse United States (US$) (CCPC), established to purchase banks' non- of the local property market and weak Bankers Trust 8.3 14.1 performing property loans at discounts to domestic economic activity, are seeing a Cit carp 6.5 11.2 J.P. Margan 9.3 13.0 face value. By the end of February 1994, the decline in problem loans. a. As of September 993. CCPC had purchased Y2.75 trillion of non- Source: Salomon Brothers and BCA. FINANCIAL BRIEF LEGAL BARRIERS AND question arises as to how important barriers FOREIGN INVESTMENT are to market pricing and what effect their removal would have. * EMERGING MARKETS REMAIN LARGELY A recent study of emerging markets in SEGMENTED FROM INTERNATIONAL CAPITAL 1989-92 found that, of the 16 economies for iviARKETS which satisfactory data were available, 10- Equity portfolio flows to developing coun- Brazil, Colombia, Greece, Korea, Malaysia, tries have more than quadrupled in the past Mexico, Pakistan, the Philippines, Taiwan few years to reach an estimated US$25.2 bil- (China), and Thailand-were not fully inte- lion (gross) in 1993. The increased impor- grated, and the other six-Chile, India, tance of foreign investors in emerging stock Jordan, Nigeria, Venezuela, and Zimbabwe - markets is due in part to the progressive might be integrated, within the margin of removal of formal barriers to foreign partici- error of the statistical tests (table 11). By con- pation. Many developing countries have trast, stock markets in all 16 economies may removed restrictions on foreign ownership, be fully segmented, with the statistical tests liberalized capital account transactions, and establishing partial segmentation in only eased remittance and other restrictions. three countries-India, Korea, and the But are emerging stock markets inte- Philippines (with inconclusive tests for grated fully with international capital mar- Colombia and Malaysia). Thus, the markets in kets, or do they remain segmented? To the at least eight economies were found to be seg- extent that they are still segmented, once- mented from international capital markets. and-for-all gains will not have been The tests of integration and segmentation exhausted. And if they are segmented, the employ the "capital asset pricing model" and 22 FINANCIAL FLOWS AND THE DEVELOPING COUNTRIES FINANCIAL BRIEF calculate the "betas" for individual emerging- Pakistan, the Philippines, and Malaysia), TABLE 1! market stocks in relation to a global capital indicating that these economies have mostly INTEGRATION VERSUS marketindex and to the individual emerging- market-wide, rather than sector- or stock- SEGMENTATION IN market index. To the extent that the global specific, restrictions. For Taiwan (China) the EMERGING MARKETS index is insufficient to account fully for variation is nil; for Colombia, Greece, and iMarker Market integroted segmented expected returns (in the econometricjargon, Venezuela it is substantial. Countries show- with from that "the orthogonal component is different ing little change over time in access, but a sig- globat global Economy market -market from zero"), the emerging market is not fully nificant variation across stocks, are Jordan, Brazil na maybe integrated. Similarly, if the emerging-market Malaysia, the Philippines, and Thailand. Chile maybe maybe index is insufficient to explain expected What influence does the degree of acces- Colombia no - Greece no maybe returns, the market is not fully segmented. sibility for foreigners (as measured by the Ind a maybe maybe The prevalence of segmentation in investability indexes) have on market prices? Jordan maybe maybe Karea, 1989-92 suggests that barriers curtailing The same study suggests that the price- Rep. of no maybe access by foreigners to emerging markets earnings (P/E) ratio is positively related to Malaysia no - Mexica na maybe continue to be important in determining the degree of access by foreigners, implying N geria nayoe maybe stock prices. Legal barriers include capital that barriers to access have a negative impact Pakstan no maybe Phii.pD.nes no maybe controls affecting the ability to invest in (and on prices. The result is statistically most Taiwan repatriate capital from) the host country, tax- robust forJordan and Mexico. Moreover, the (China) no maybe The land no maybe ation, restrictions on the share of foreign result holds regardless of particular market Venezuela maybe maybe ownership, and other sector- or company- trends, since the positive relation is still Zrmbabwe maybe maybe specific ownership restrictions. Other (indi- found when the P/E ratio for an individual Nonclusive. Note: Taiwan (Cb na) is a high- rect) barriers include the efficiency of the stock is expressed as a fraction of the mar- income economy. domestic stock market and other financial ket's P/E ratio. markets; the regulatory, accounting, and The sensitivity of a stock's P/E ratio to the enforcement standards in the host country; degree of access turns out to be similar for TABLE 12 different transfer (or sovereign) risks; and Brazil, Greece, Jordan, Malaysia, Mexico, DEGREE OF ACCESSI- transaction costs. and the Philippines; Thailand has a low sen- BILITY FOR FOREIGN One measure of the degree of accessibil- sitivity. For the others, the mean sensitivity is INEESTORS TO ' ~~~~EMERGING-MARKET itv for foreigners to emerging-market stocks about 0.9. This means that if the permitted STOCKS is the newly created "investability indexes" foreign share of ownership for any stock were As measured by the IFCs investa- from the Emerging Markets Data Base of the raised from 10 percent to 20 percent, for n indexes Mean Mean IFC. The IFC investability indexes capture, example, P/E ratios would be expected to Economy _ jan. 89 Dec. 92 for each stock or market, the legal barriers to rise by 90 percent on average. Argentina 0.58 0.79 free access by foreigners (table 12). The One caveat: Although P/E ratios in the Brazil 0.18 0.53 Cn.le 0.09 0.14 indexes take on values between 0, signifying emerging markets show a strong relationship Colomba .. 0.5 complete lack of access by foreigners, and 1, with degree of access by foreigners, actual Greece 0.31 0.47 India ,. 0.15 signifying complete access. rates of return do not. The explanation lies Indonesia 026 For recent years, the investability indexes in the difference between realized (ex post) Jordan 0. 0.09 Karea, Rep. of .. 0.1 show sharp changes for some countries. For and expected (ex ante) rates of return. At a Maaysia 0.84 0.85 instance, for Mexico, the index goes up from time of opening up of markets, it seems that Mexco 0.1 0.61 Pakistan .. 0,09 an average of 0.10 inJanuary 1989 to 0.61 at realized rates of return are a poor proxy for Ph ippines 0.28 0.25 the end of 1992 and to 0.80 in March 1993. expected rates. Portugal 0.74 0.38 For Brazil, the average rises from 0.18 to 0.53. Taiwan (China) 1. 0.03 Thailand 0.3 0.27 The variation in the investability index dif- This article is based on S. Claessens and M. IV. Rhee, Turkey .. 0.8 Venezuela .. 0.41 fers greatly from country to country. The "The Effects of Barriers on Equity Investment in Not available, variation across stocks is generally lower in Developing Countries, "Policy Research Working Paper Source: Claessens and Rhee (1994). Asia (although partial exceptions are 1263, World Bank, Washington, DC, 1994. MAY 1994 23 TABLE A.1 TOTAL EXTERNAL DEBT US$ millions Country group or country 1987 1988 1989 1990 1991 1992 993a All developing countries 1,381,176.1 1,373,220.1 1,411,347.4 1,518,449.4 1,605,932.6 1,662,1 70.3 1,770,064,6 Long-term 1,142,448.5 1,128,135.5 1,140,556.3 1,209,841.3 1,269,324.9 1,308,224.8 1,410,910.0 Official 511,935.6 519,135.2 539,020.9 600,014.5 651,961.3 665,607.4 719,520.1 Private 630,512.9 609,000.4 601,535.3 609,826.8 617,363.6 642,617.6 691,389.9 Short-term 195,872.2 209,973.0 238,723.9 273,956.6 298,479.3 315,680.7 320,518.0 IMF credit 42,855.4 35,1 1 1.8 32,067.3 34,651.5 38,128.4 38,264.7 38,636.6 Sub-Saharan Africa 165,191.6 166,310.2 173,843.4 191,127.5 195,531.5 194,263.4 199,046.1 East Asia and Pacific 223,584.2 225,340.0 227,162.8 259,805.9 293,815.1 320,189.3 366,741.2 Europe and Central Asia 237,359.8 237,425.6 256,456.5 286,408.4 310,547.0 329,056.4 351,279.7 Latin America and the Caribbean 474,294.4 455,740.1 450,957.1 473,729.4 488,424.6 496,329.8 5 3,031.8 Middle East and North Africa 184,127.5 186,583.3 194,203.7 188,382.6 191,403.1 188,977.9 194,683.8 SouthAsia 96,618.6 101,821.3 108,723.9 118,995.6 126,211.1 133,353.4 145,282.1 Severely indebted middle-income 526,976.4 512,938.0 521,809.0 557,050.4 575,1 92.8 570,818.3 584,244.1 Albania 0 0 74.4 348.6 500.7 624.5 Algeria 24,395.5 26,037.5 26,999.2 27,636.8 27,918.6 26,349.4 Angola 4,431.8 5,061.0 6,768.4 8,181.4 8,717.5 9,644.8 Argentina 58,458.0 58,740.8 65,256.7 62,233.3 65,396.4 67,569.2 Bolivia 5,836.2 4,901.6 4,135.5 4,278.2 4,076.5 4,242.7 Brazil 123,837.1 115,71 1.5 111,373.8 116,417.0 1 7,350.0 121,110.2 Bulgaria 18,255.5 8,933.9 10,123.6 10,867.5 11,969.7 12,145.9 Cameroon 4,031.7 4,220.1 4,790.3 5,990.1 6,276.3 6,554.4 Congo 4,295.8 4,085.1 4,257.1 4,922.4 4,832.6 4,750.9 C6te d'lvoire 812,576.4 12,577.7 14,057.9 16,621.9 17,557.0 17,997.2 Ecuador 7,510,473.4 10,745.1 1 1,317.4 12,109.3 12,468.1 12,279.9 Jamaica 4,696.3 4,532.5 4,536.3 4,628.1 4,480.3 4,303.6 Jordan 6,390.6 6,665.9 7,329.2 8,269.3 8,649.0 7,976.. Mexico 109,460.2 99,204.2 93,816.5 105,958.3 115,290.6 113,378.3 Morocco 20,776.4 21,011.4 21,601.3 23,477.7 21,304.3 21,418.1 Panama 5,630.3 6,066.4 6,318.1 6,678.6 6,732.8 6,485.2 Peru 17,490.3 18,245.2 18,583.3 20,068.4 20,719.8 20,297.0 Poland 42,632.1 42,131.5 43,125.0 49,395.0 52,775.4 48,521.0 Syrian Arab Republic 15,998.8 16,384.6 16,882.5 16,447.8 6,867.1 16,513.2 Severely indebted low-income 188,109.5 193,634.3 198,476.5 201,879.2 206,173.3 204,086.0 207.862.9 Moderately indebted low-income 145,783.6 151,688.1 161,421.8 185,750.2 201,502.1 217,304.0 238,874.8 Moderately indebted middle-income 266,219.5 267,190.2 280,258.2 305,062.4 321,222.4 344,213.3 365,097.3 Selected countriesb 469,834.1 472,767.2 475,867.8 512,964.2 551,847.7 587,393.8 652,643.3 Chile 21,489.4 19,581.9 18,032.3 19,227.2 17,946.9 19,360.1 China 35,296.4 42,362.4 44,812.1 52,554.4 60,851.1 69,320.6 Colombia 17,007.9 16,994.7 16,877.9 17,231.7 17,337.9 17,203.6 Egypt 52,196.8 52,670.6 51,696.6 40,435.0 41,007.5 40,430.6 Hungary 19,583.8 19,602.7 20,390.1 21,269.5 22,777.1 21,899.5 India 55,753.0 58,403.6 63,810.4 68,697.6 71,641.9 76,982.7 Indonesia 49,738.5 51,415.0 53,494.2 67,011.1 76,1 10.2 84,384.6 Korea, Rep. of 39,807.8 35,716.5 32,799.2 34,987.7 39,633.9 42,998.9 Malaysia 22,839.4 18,567.3 16,278.2 16,062.9 17,780.1 19,836.8 Nigeria 30,654.9 31,245.8 31,996.7 34,537.7 34,436.1 30,998.3 Philippines 29,808.3 29,023.0 28,507.5 30,424.0 32,224.5 32,588.9 Thailand 20,305.2 21,664.3 23,432.1 28,207.5 35,828.4 39,423.8 Turkey 40,782.9 40,781.8 41,363.6 49,147.5 50,226.0 54,772.3 Venezuela 34,569.8 34,737.6 32,376.9 33,170.4 34,046.1 37, 93.1 Not available. Note: Table includes data for 148 developing countries, of which 129 report to the World Bank Debtor Reporting System. See table A. I I for courtry classificatons. a. Projection. b. Most of these countries are also included in the indebted country groups. Source: World Bank, Debtor Reporting System. 24 FINANCIAL FLOWS AND THE DEVELOPING COUNTRIES STATISTICAL APPENDIX TABLE A.2 AGGREGATE NET LONG-TERM RESOURCE FLOWS US$ millions Type offinance 1983 (984 1985 1986 1987 (988 1989 1990 1991 f992 1993a Official development finance 34,802.6 33,619.4 39,656.6 43,959.4 43,914.3 40,750.0 41,139.7 59,123.5 62,912.0 54,581.3 63,454.3 Official development assistance 21,894.2 21,517.6 26,692.2 27,831.6 32,160.5 31,582.4 33,814.7 43,708.8 46,793.7 48,315.0 51,422.8 Official grants' 10,404.7 12,572.9 15,617.7 16,022.3 16,690.7 18,257.4 19,022.5 28,458.3 32,870.0 34,460.5 35,504.5 Official concessionary loans 1 1,489.5 8,944.7 1 1,074.5 11,809.3 15,469.8 13,325.0 14,792.2 15,250.5 13,923.7 13,854.5 15,918.3 Bilateral 7,918.5 5,252.9 7,081.0 7,321.5 10,021.4 7,961.7 9,480.7 8,943.5 7,281.8 6,497.2 Multilateral 3,571.0 3,691.8 3,993.5 4,487.8 5,448.4 5,363.3 5,311.5 6,307.0 6,641.9 7,357.3 Official nonconcessionary oans 12,908.4 12,101.8 12,964.4 16,127.8 11,753.8 9,167.6 7,325.0 15,414.7 16,118.3 6,266.3 12,031.5 Bilateral 5,221.5 3,294.1 4,049.9 5,437.1 2,218.9 3,407.6 928.8 6,928.9 7,908.0 1,435.6 Multilateral 7.686.9 8,807.7 8,914.5 10,690.7 9,534.9 5,760.0 6,396.2 8,485.8 8,210.3 4,830.7 Private loans 39,287.2 36,822.8 31,938.9 19,331.8 23,123.9 32,200.6 34,862.0 39,203.6 50,668.0 88,977.2 100,014.0 Bonds 1,632.3 -117.4 5,610.8 753.7 1,029.9 2,938.8 4,221.9 2,251.4 7,412.3 6,344.7 Commercial banks 23,433.2 23,015.6 7,769.0 1,765.7 1,082.8 7,901.5 3,91 8.0 2,464.8 5,418.0 18,542.3 Other private 5,669.2 4,487.2 7,223.0 6,670.6 6,477.1 155.9 2,01 1.9 13,077.2 961.3 16,822.7 Foreign direct investment 8,552.5 9,437.4 1 1,336.1 10,141.8 14,534.1 21,204.4 24,710.2 26,339.8 36,876.4 47,267.5 56,283.0 Pordfolioequityflows 0.0 150.0 138.0 606.0 761.0 1,096.0 3,485.9 3,773.6 7,552.2 13,072.9 13,192.0 Aggregate net resourceflows 74,089.8 70,592.2 71,733.5 63,897.2 67,799.2 74,046.6 79,487.6 102,100.7 121,132.2 156,631.4 176,660.6 Aggregate net transfers 9,708.4 2,046.8 586.6 -5,065.0 -2,921.7 5,448.0 2,265.6 25,462.4 44,462.7 79,613.6 91,586.9 Memo Items Privategrants 2,300.1 2,600.0 2,900.0 3,300.1 4,000.0 4,300.1 4,000.0 4,890.0 5,199.8 5,499.9 5,900.0 Net use of lMF credif 1 ,067.1 4,454.0 -155.0 2,875.7 -6,301.7 5,491.9 -2,320.6 132.7 3,159.8 1,151.8 364.4 Real aggregate net resource fows 92,612.3 90,969.3 94,015.1 80,985.0 78,836.3 81,102.5 85,932.6 104,611.4 124,110.9 158,053.9 176,660.6 Import price index 80.0 77.6 76.3 78.9 86.0 91.3 92.5 97.6 97.6 99.1 100.0 Not available. Note: Table includes data for 148 developing countries, of which 129 report to the World Bank Debtor Reporting System. See table A. I I a. Projection. b. Excludes technical cooperat on grants. c. Includes IMF Trust Fund and Enhanced Structural Adjustment Facility. Source: World Bank, Debtor Reporting System; OECD; data on foreign direct investment are from the IMF. MAY 1994 25 STATISTICAL APPENDIX TABLE A.3 BANK AND TRADE-RELATED NONBANK CLAIMS US$ millions 1993Q2 Trade-reloted Bank Guaranteed nonbank Country group or country 1989 i990 1991 1992Q2 1992Q4 Totol claims claims claims All developing countries 723,524 765,893 806,823 830,789 844,956 862,201 708,386 115,565 153,815 Sub-SaharanAfnca 55,125 60,373 59,253 58,833 58,493 55,155 32,646 9,596 22,509 East Asia and Pacific 136,632 165,408 192,187 199,8 16 218,541 232,052 203,315 14,280 28,737 Europe and Central Asia 157,439 184,089 189,401 194,598 189,328 195,764 162,994 34,734 32,770 Latin America and the Caribbean 258,312 238,612 244,398 253,092 255,087 254,903 221,399 27,242 33,504 Middle East and North Africa 94,521 94,922 100,018 101,149 98,121 99,642 67,638 24,270 32,004 South Asia 21,495 22,489 21,566 23,301 25,386 24,685 20,394 5,443 4,291 Severely indebted middle-income 293,670 289,806 297,525 303,462 302,202 300,778 251,200 41,764 49,578 Albania 396 464 403 398 414 424 407 5 17 Algeria 20,285 21,014 21,805 21,276 22,3 14 22,304 19,062 13,142 3,242 Angola 2,168 2,370 2,680 2,925 3,361 3,069 2,001 811 1,068 Argentina 35,787 34,475 36,356 37,339 38,815 34,924 29,881 2,355 5,043 Bolivia 453 463 534 689 563 457 215 49 242 Brazil 77,887 76,167 71,931 75,093 74,414 75,361 66,31 1 4,292 9,050 Bulgaria 8,324 9,348 8,909 8,522 8,133 7,644 6,956 547 688 Cameroon 2,194 2,757 2,843 2,784 2,757 2,644 1,515 624 1,129 Congo 1,537 1,724 1,622 1,615 1,604 1,615 974 290 641 C6te d'lvoire 4,186 4,379 4,042 4,132 3,824 3,477 2,282 348 1,195 Ecuador 5,202 4,773 4,553 4,543 4,173 4,020 3,447 381 573 Jamaica 983 975 737 761 733 703 454 132 249 Jordan 3,217 3,657 3,297 3,356 2,896 3,057 2,152 835 905 Mexico 75,507 62,684 72,485 75,731 75,688 79,056 70,797 12,261 8,259 Morocco 7,201 8,002 8,053 8,1 19 7,814 7,667 5,1 14 2,707 2,553 Panama 20,006 22,855 22,926 22,620 22,720 23,871 23,436 124 435 Peru 5,967 6,179 6,143 5,936 5,790 5,546 3,065 410 2,481 Poland 21,044 26,301 27,099 26,583 25,157 23,934 12,443 2,410 1 1,491 SyrianArabRepublic 1,326 1,219 1,107 1,040 1,032 1,005 688 41 317 Severely indeted low-income 55,673 57,506 56,968 57;214 53,938 52,187 30,218 6,705 21,969 Moderately indebted low4ncome 48,304 59,231 63,346 68,110 74,249 75,279 63,226 10,279 12,053 Moderately indebted middle-income 146,918 I 55,178 155,838 160,074 161,557 165,983 142,779 37,952 23,204 Sekected countriesa 236,512 259,745 283,024 293,975 312,304 324,727 275,163 36,199 49,564 Chile 9,880 9,823 9,149 10,084 11,191 11,564 10,544 691 1,020 China 26,682 34,430 41,381 41,459 49,016 50,205 42,983 4,658 7,222 Colombia 8,841 8,889 8,479 8,392 8,846 8,987 7,515 1,367 1,472 Egypt 18,689 14,224 13,569 13,720 10,947 10,228 4,124 2,272 6,104 Hungary 12,219 12,359 11,ISI 10,459 9,288 9,506 8,846 973 660 India 15,950 15,640 15,383 16,874 18,904 17,506 15,202 3,351 2,304 Indonesia 25,507 34,850 39,773 42,984 47,064 48,953 41,591 4,235 7,362 Korea,Rep,of 31,503 36,216 41,820 44,122 44,731 48,336 46,445 1,213 1,891 Malaysia 9,141 9,252 10,062 10,549 12,834 15,666 13,537 713 2,129 Nigeria 11,865 12,796 12,896 12,591 12,887 11,632 4,381 2,178 7,251 Philippines 1 1,914 1 1,969 1 1,839 1 1,112 10,824 9,674 6,644 1,651 3,030 Thailand 12,376 18,035 24,953 27,345 30,521 34,465 31,016 1,353 3,449 Turkey 16,705 22,230 23,094 24,351 25,083 28,352 24,129 7,317 4,223 Venezuela 25,240 19,032 19,475 19,933 20,168 19,653 18,206 4,227 1,447 Offshore banking centers 89,226 116,422 121,921 129,854 140,686 145,099 139,667 5,162 5,432 Oil exporters 167,188 176,696 185,856 190,342 191,462 192,945 149,976 47,224 42,969 DRS reporters 122,416 132,264 139,563 144,350 145,679 146,064 115,325 44,206 30,739 DRSreporters 673,370 718,257 756,372 780,518 795,441 813,235 678,14i i 12,242 135,094 Note: See table A, I I for country classifications, a. Most of these countries are also included in the indebted country groups. Source: OECD; Bank for International Settlements, Statistics on Extemal Indebtedness. 26 FINANCIAL FLOWS AND THE DEVELOPING COUNTRIES STATISTICAL APPENDIX TABLE A.4 COMMERCIAL BANK CLAIMS ON DEVELOPING COUNTRIES US$ millions Claims Liobilities Country group or country 1992 1993QI 1993Q2 1993Q3 1992 1993QI 1993Q2 1 993Q3 All developing countries 691,385 699,010 704,331 703,490 562,533 556,847 550,324 550,019 Sub-SaharanAfrica 34,614 32,939 32,428 32,078 29,408 29,735 29,307 29,891 EastAsiaand Pacfic 91,665 195,385 202,727 205,399 137,618 129,210 123,439 127,184 Europe and Central Asia 155,353 156,483 158,188 158,028 87,223 87,871 92,050 95,862 LatnAmericaandthe Caribbean 224,903 227,707 225,627 225,347 140,363 139,414 136,660 133,957 Middle East and North Africa 61,187 63,179 62,169 59,551 127,660 127,968 127,094 122,794 South Asia 23,663 23,317 23,192 23,087 40,261 42,649 41,774 40,331 Severely indebted middle-income 254,234 255,434 252,075 252,509 155,374 155,041 151,351 150,135 Alban a 396 417 407 437 67 71 95 95 Algeria 13,904 14.731 14,1 13 14,480 3128 3,526 3,082 3,600 Angola 2,1 13 1,996 1,897 1,951 748 627 569 435 Argentina 33,566 33,805 29,861 30,020 19,942 21,121 20,193 19,906 Bolivia 302 286 215 212 717 702 701 753 Brazil 64,132 65,146 66,282 65,959 26,828 26,979 26,200 26,105 Bulgaria 7,419 7,286 6,956 7,015 1,402 1,269 1,191 1,323 Cameroon 1,500 1,534 1,431 1,446 720 706 632 623 Congo 967 881 967 1,022 349 418 346 319 C6ted'lvoire 2,475 2,176 2,238 2,417 1,991 2,008 1,734 1,906 Ecuador 3,601 3,433 3,363 3,223 2,841 2,648 2,322 2,401 Jamaca 485 442 450 437 662 611 643 579 Jordan 1,832 1,788 1,747 1,649 6,877 6,767 6,554 6,420 Mexico 67,785 69,242 70,496 70,044 26,164 26,329 26.161 24,672 Morocco 5,239 4,982 4,845 4,935 5,723 5,441 5,536 5,775 Panama 3 1,339 30,64 1 30,808 31,374 40,536 40,113 39,611 39,334 Peru 3,388 3,225 3,020 2,858 3,897 3,862 3,877 3,800 Poland 13,093 2,768 12,292 2,404 7,522 6,468 6,590 6,644 Syrian Arab Republic 698 655 687 626 5,260 5,375 5,314 5,445 Severely indebted low-income 29,987 29,990 29,842 29,473 51,061 51,223 50,674 51,449 Moderatelyindebted low-income 60,686 61,310 61,352 60,918 31,899 32,253 30,429 29,821 Moderately indebted middle-income 136,656 136,960 137,625 138,925 87,466 86,447 86,754 87,259 Selected countries' 258,096 258,666 269,428 271,984 189,490 177,118 173,264 182,235 Chi e 10,121 10,518 10,428 10,585 6,781 6,412 6,473 7,164 Ch na 42,676 39,007 42,735 42.968 48,171 41,044 39,046 40,285 Colomba 7,260 7,373 7,517 7,535 8,242 7,930 8.109 7,753 Egypt 4,269 4,082 3,969 3,717 22,324 22,772 22,593 23,873 Hungary 8,648 8,967 8,774 7,888 2,840 2,550 2,387 2,322 India 15,456 14,970 4,646 14,511 6,797 7,630 7,133 6,930 Indonesa 40,084 41,110 41,514 41,169 17,180 16,763 15,955 15,605 Korea, Rep. of 42,653 44,214 46,414 46,433 15,180 16,167 15,745 15,604 Malaysia 1 1,094 12,409 13,532 14,319 12,205 8,303 9,411 15,719 Nigera 4,563 4,237 4,176 4,128 4,369 4,197 4,392 4,677 Philippines 7,433 7,274 6,659 6,202 4,529 4,938 4,496 4,193 Thailand 27,419 28,189 30,854 33,173 4,599 3,969 3,967 3,923 Turkey 17,840 18,045 20,013 20,975 14,575 13,463 13,380 13,924 Venezue a 18,580 18,271 18,197 18,381 21,698 20,980 20,177 20,263 Offshorebankngcenters 1,037,852 1,040,927 1,052,634 1,103,092 941,446 919,299 881,939 941,429 Oi exporters 161,516 160,854 160,724 159,805 92,924 188,564 186,432 177,917 DRSreporters I 11,298 1 1 1,298 109,394 11 1,224 54,767 55,557 56,033 56,416 DRSreporters 773,514 777,713 792,1 1 791.105 593,640 585,162 577,262 586,673 Note See table A. I I for country classificat ons. a. Most of these countries are also included in the indebted country groups. Source: Bank for International Settlements, Intemational Bankng and Fnonciol Morket Developmenrs. MAY 1994 27 ST1ATISTiCAL APPENDIX TABLE A.5 COMMERCIAL BANK CLAIMS ON DEVELOPING COUNTRIES, BY COUNTRY OF ORIGIN US$ millions Francea Germanyb Country group or country 1991 1 992Q3 1 992Q4 1993QI 1992Q4 1993QI 1 993Q2 1993Q3 All developing countries 81,481 89,837 82,498 82,164 138,151 42,232 139,969 145,712 Sub-Saharan Africa 10,769 10,782 9,681 9,474 7,145 7,335 7,131 7,249 East Asia and Pacific 17,181 21,776 19,612 21,850 16,301 17,039 16,961 18,171 Europe and Central Asia 16,932 18,917 18,251 16,736 61,446 63,120 62,716 65,998 Latin America and the Caribbean 17,290 18.371 17,260 16,693 33,038 34,277 32,987 33,577 NorthAfrcaandtheMiddle East 17,371 17,467 15,524 15,269 11,724 11,856 11,458 12,013 South Asia 1,939 2,523 2,169 2, 42 8,498 8,604 8,716 8,704 Severely indebted middle-income 31,421 32,253 29,694 28,356 39,022 39,768 38,137 39,070 Alban a 66 63 44 69 .. Algeria 5,775 5,287 4,613 4,656 1,648 1,601 1,490 1,547 Angola 730 744 745 628 .. Argentina 2,335 2,298 2,350 2,099 7,357 7,631 7,212 7,510 Bolivia 18 18 19 18 310 307 302 318 Brazil 7,885 8,292 7,693 7,447 10,656 10,973 10,587 10,408 Bulgaria 654 664 621 542 2,524 2,548 2,367 2,553 Cameroon 809 768 685 787 866 860 764 811 Congo 697 714 669 508 .. C6te d'lvoire 1,936 2,065 1,793 1,412 348 347 334 361 Ecuador 164 152 167 125 585 608 549 544 Jamaica 14 12 10 7 .. Jordan 1,020 1.095 746 740 514 439 421 435 Mexico 2,357 2,849 2,610 2,669 4,470 4,739 4,727 4,787 Morocco 2,199 2,296 2,157 1,986 1,129 1,139 1,075 1,1 12 Panama 2,530 2,596 2,623 2,627 1,473 1,428 1,543 1,736 Peru 640 629 571 508 1,014 1,020 913 943 Poland 1,321 1,425 1,308 1,288 5,607 5,605 5,341 5,472 SyrianArab Republic 271 285 271 241 521 523 512 532 Severely indebted low-income 7,139 7,384 6,41 1 6,353 6,301 6,368 6,390 6,645 Moderately indebted low-income 4,866 5,623 4,988 5,092 11,142 11,513 11,374 11,704 Moderately indebted middle-income 12,704 13,445 12,854 1 1,298 47,993 49,609 49,201 52,068 Selected countriesc 23,758 26,742 23,985 25,426 38,626 39,879 39,498 41,685 Chile 437 539 543 513 1,651 1,777 1,696 ,717 China 3,769 4,645 4,512 5,716 2,381 2,686 2,523 2,938 Colombia 512 575 589 624 1,054 1,044 1,107 1,167 Egypt 2,437 2,364 1,972 1,851 2,650 2,641 2,568 2,630 Hungary 217 175 153 144 3,668 3,936 3,709 3,375 India 1,362 1,783 1,451 1,328 5,367 5,456 5,302 5,556 Indonesia 2,537 2,692 2,431 2,541 3,705 3,956 3,938 4,029 Korea, Rep. of 4,573 5,904 4,664 5,205 3,778 3,746 3,724 3,756 Malaysia 455 712 659 694 1,093 1,209 1,266 1,456 Nigeria 1,500 1,295 1,129 ,008 745 702 663 656 Philippines 1,389 894 811 731 506 494 616 596 Thaiand 1,276 1,701 1,668 1,850 2,600 2,643 2,686 3,128 Turkey 1,928 2,077 2,093 2,072 6,828 6,829 7,105 7,891 Venezuela 1,367 1,386 1,309 1,150 2,602 2,760 2,596 2,790 Offshore banking centers 35,166 42,766 40,286 38,450 66,516 70,023 71,594 76,717 Oil exporters 21,848 22,671 21,364 19,901 41,575 42,893 42,150 44,625 DRSreporters 17,114 17,633 16,221 14,136 38,616 39,733 38,912 41,410 DRS reporters 75,903 83,040 76,047 75,093 130,552 134,325 132,028 37,841 28 FINANCIAL FLOWS AND THE DEVELOPING COUNTRIES STATISTICAL APPENDIX Itoay Jopon' Country group or country 1992 1993Q I 993Q2 1993Q3 1987QI 198 7Q3 1988Q I All developing countries 18,164 17,876 18,095 17,991 71,067 72,511 79,810 Sub-Saharan Africa 818 825 800 814 647 784 819 East Asia and Pacific 84 70 65 71 21,294 21,251 24,973 Europe and Central Asia 8,958 8,715 8,714 8,909 10,244 1,227 12,014 LainAmericaandtheCaribbean 5,452 5,358 5,372 5,060 33,623 33,776 35,617 North Africa and the M ddle East 708 622 672 677 3,600 3,593 3,818 South Asa 2,145 2,285 2,472 2,459 659 1,880 2,569 Severely indebted middle-income 6,667 6,577 6,442 6,206 36,070 36,705 39,422 Albania 88 89 93 Algeria ,, 2,695 2,690 2,852 Angoia '. Argentina 1,657 1,699 1,631 1,566 5,227 4,982 5,61 1 Bolivia 5 5 5 5 3 2 3 Brazil 827 754 780 776 9,241 9. 32 9,723 Bulgaria 589 557 522 544 952 1,132 1,172 Cameroon Congo .. Cote d'lvo re 12 13 0 19 154 156 160 Ecuador 167 157 154 164 801 791 879 Jamaica .. .. 17 17 18 Jordan .. .. .. .. 23 19 17 Mexico 1,579 1,59 1 1,597 1,401 1 0,495 11,058 11,372 Morocco 384 352 332 331 485 471 525 Panama .. .. .. . 4,964 5,246 6,045 Peru 102 93 91 83 337 335 337 Poand 1,345 ,268 1,23 1,225 676 674 708 Syr an Arab Republic .. .. .. .. Severely indebted low-income 806 813 790 795 2,635 2,699 2,929 Moderately indebted low-income .. .. .. .. 6,667 6,956 8,089 Moderately indebted middle-income 7,7 3 7,403 7,496 7,613 16,640 7,225 18,284 Selected countriesc 2,161 2,082 2,103 2,060 32,384 32,638 37,224 Ch le 131 127 149 is 532 1,570 1,647 Ch na .. .. .. .. 2,470 3,132 4,578 Colomba 141 13 45 88 1,259 1,189 1.216 Egypt 17 20 20 Hungary 214 201 195 202 3,228 3,391 3,643 India .. 1,409 1,626 2,190 Indonesia .. 5,214 5,289 5,841 Korea, Rep. of .. 5,720 4,777 5.413 Malaysia .. 2,949 2,838 3,041 Nigeria 806 813 790 795 272 304 297 Philippines 84 70 65 71 2,340 2,282 2,583 Tha land 2,187 2,429 2,929 Turkey Venezuela 786 739 758 753 3,787 3,791 3,826 Offshore banking centers 23,198 21,419 21,800 25,480 12,673 15,070 17,447 Oil exporters 7,891 7,624 7,670 7,822 1 2,039 12,623 13,178 DRS reporters 7,891 7,624 7,670 7,822 1 475 2,011 12,587 DRS reporters 16,019 15,502 15,535 15,438 78,053 79,921 88,271 (teabe contsnues on next page) MAY 1 994 29 Bi' 7 -A H -C,S'_4AP pE ND I X TABLE A.5 COMMERCIAL BANK CLAIMS ON DEVELOPING COUNTRIES, BY COUNTRY OF ORIGIN (CONTINUED) us$ millions Netherlondst Switzerlond Country group or country 1991 1992Q2 i992Q4 1993Q2 1989 1990 1991 1992 All developing countries 18,713 20,619 21,011 22,343 20,610 24,563 24,212 24,642 Sub-Saharan Africa 820 838 819 1,140 2,431 2,972 2,468 2,215 EastAsia and Pacific 4,021 4,604 3,577 4,217 1,787 2,117 2,904 3,517 Europe and Central Asia 4,012 4,140 4,417 4,328 7,442 8,262 7,283 5,569 Latin America and the Caribbean 7,280 8,611 9,512 10,307 6,379 7,870 8,1 95 9,458 North Africa and the Middle East 1,934 1,681 1,782 1,715 2,169 2,768 2,836 3,164 South Asia 647 746 905 636 402 574 527 718 Severely indebted middle-income 6,093 6,948 7,312 7,684 10,629 12,455 12,018 11,974 Albania ., .. .. .. 139 83 62 62 Algeria 765 722 688 659 301 338 307 298 Angola .. .. .. .. 73 97 63 106 Argentina 1,029 1,329 1,439 1,668 1,207 1,414 1,471 1,604 Bolivia .. .. .. . 10 12 12 16 Brazil 1,321 1,639 2,003 2,234 2,197 2,862 2,812 2,821 Bulgaria 444 482 445 248 Cameroon 46 61 S l 43 Congo 2 2 4 1 C6te d'lvoire II 1 104 11I 100 Ecuador 301 363 257 352 72 107 125 132 Jamaica .. .. .. .. 13 21 18 8 Jordan .. .. .. .. 89 93 93 106 Mexico 1,853 2,017 2,168 1.990 1,322 1,716 1,864 2,369 Morocco .. .. .. .. 103 151 162 131 Panama 433 510 403 443 4,005 4,331 3,782 3,295 Peru .. .. .. .. 84 108 142 172 Poland 392 368 353 339 379 449 479 443 Syrian Arab Republic 35 23 15 19 Severely indebted low-income 174 339 130 .. 1,975 2,148 2,170 1,963 Moderately indebted low-income 1,318 1,480 1,659 1,799 691 1,023 902 1,253 Moderately indebted middle-income 3,596 4,074 4,753 5,114 5,748 6,431 5,633 4,655 Selected countriesc 4,387 5,621 5,981 7,009 4,806 6,286 6,120 6,924 Chile 398 499 668 708 193 304 376 624 China 413 515 435 506 276 363 438 495 Colombia 277 346 537 636 194 18 168 291 Egypt .. .. .. .. 454 504 416 383 Hungary .. .. .. .. 297 294 118 63 India .. .. .. .. 250 379 275 417 Indonesia 1,318 1,480 1,659 1,799 89 246 193 317 Korea, Rep. of 467 826 775 694 336 584 712 775 Malaysia .. 264 58 79 172 150 Nigeria .. .. 311 320 311 200 Philippines .. .. 199 178 144 121 Thailand 451 773 458 574 267 401 552 633 Turkey 545 576 73i 1,013 1,202 1,865 1,579 1,617 Venezuela 517 607 719 815 579 587 665 839 Offshore banking centers 10,492 12,125 12,305 11,393 18,116 21,133 20,833 19,759 Oil exporters 3,155 3,555 3,984 3,739 6,294 6,381 6,155 5,291 DRS reporters 2,705 3,055 3,281 3,140 4,305 4,612 4,131 2,942 DRS reporters 14,91 1 17,242 7,813 18,943 23,062 27,053 26,129 26,172 30 FINANCIAL FLOWS AND THE DEVELOPING COUNTRIES STATISTICAL APPENDIX United Kingdoma United Statesa Country group or country 1989 1990 1991 Q2 199IQ4 1 992Q4 1993Ql 1 993Q2 1993Q3 All developing countries 53,007 45,643 42,708 46,717 70,799 73,512 77,229 77,778 Sub-Saharan Africa 7,435 7,084 6,531 6,766 2,543 2,408 2,132 2,011 EastAsiaand Pacific 5,267 5,501 5,739 6,839 14,312 14,726 15,455 14,928 Europe and Central Asia 10,649 10,155 9,005 9,736 4,359 4,385 5,046 5,333 Latin America and the Caribbean 23,623 16,856 16,271 17,475 45,746 48,094 50,719 51,476 North Africa and the Middle East 4,459 4,347 3,644 4,203 2,759 2,760 2,806 2,763 South Asia 1,574 1,700 1,518 1,698 1,080 1,139 1,071 1,267 Severely indebted middle-income 24,203 17,796 16,768 17,849 33,143 34,696 36,821 38,179 Albania .. .. Ageria 784 760 655 921 486 513 503 499 Angola 32 33 31 22 . Argentina 3,343 2,352 2,244 2,738 5,777 6,357 6,860 7,344 Bolivia 26 8 .. 6 18 39 22 29 Braz 1 6,890 4,694 4,226 4,104 7,352 8,025 8,239 8,724 Bulgaria 532 473 209 233 32 43 48 53 Cameroon 71 71 73 78 .. .. .. 16 Congo 39 37 37 39 .. C6ted'lvoire 292 247 148 155 18 19 21 6 Ecuador 750 546 542 514 457 495 467 463 Jamaica 69 68 63 71 147 167 170 148 Jordan 376 382 355 357 83 74 74 67 Mexico 7,500 4,909 5,270 5.611 17,277 17,437 18,871 19,160 Morocco 447 401 308 351 461 426 453 487 Panama 1,325 1,191 1,143 1,061 615 636 580 608 Peru 464 276 295 342 195 221 245 287 Poland I, 82 1,279 1,107 1,188 216 234 260 270 SyranArabRepublic 81 69 62 58 9 10 8 8 Severely indebted low-income 4,232 3,804 3,269 3,218 1,010 1,081 1,038 1,1 13 Moderately indebted low-income 2,776 2,917 2,775 3,420 2,806 3,281 3,227 2,998 Moderately indebted middle-income 10,51 1 9,501 8,596 9,129 18,268 18,580 18,415 18,310 Selected countries' 13,062 12,654 11,994 3,301 26,307 27,331 28,006 27,831 Chile 626 567 524 704 3,174 3,577 3,465 3,256 China 938 1,025 843 1,031 430 426 499 610 Colombia 785 643 546 613 1,940 1,907 1,991 2,027 Egypt 629 650 582 594 148 180 161 119 Hungary 518 330 331 299 214 281 300 235 India 1,100 1,219 1,083 1,164 462 497 469 574 Indonesia 1,053 1,021 1,009 1,231 2,050 2,447 2,390 2,013 Korea, Rep. of 1,130 1,343 1,560 1,842 4,032 4,050 4,169 4,249 Malaysia 329 484 495 605 716 855 1,428 1,256 Nigeria 1,704 065 741 702 297 293 264 295 Philippines 956 797 736 717 2,906 2,860 2,384 2,129 Thailand 190 228 332 424 807 1,982 2,145 2,431 Turkey 892 1,142 1,156 1,134 1,307 1,320 1,593 1,886 Venezuela 2.212 2,140 2,056 2,241 6,824 6,656 6,748 6,751 Offshore banking centers 27,622 28,509 25,393 26,343 26,187 23,342 23,824 24,024 Oil exporters 12,503 10,864 9,136 10,096 10,054 9,898 10,155 10,233 DRS reporters 9,318 8,066 7,050 7,861 8,014 7,862 7,925 8,022 DRSreporters 49,093 41,055 38,079 41,917 67,539 69,954 73,510 73,769 .. Not available Note- See table A I for country class fications. a, Consolidated claims of banks and their worldwide operations. b. Partly consolidated aggregate claims of banks and their worldwide operatons. c, Most of these countries are also included in the indebted country groups Source: De Nederlandsche Bank, Quarterly Bulletin: Banque de France, Bulletin Trimestriel: Deutsche Bundesbank, Zchlungsbilonzstotistik; Banca d'Italia, Bolletino Economico, Banque Nationale Suisse, Les Banques Suisse; Bank of England, Stotisticol Abstroct, Part 1: Federa Financial Institutions Examination Council, U.S. Country Exposure Lending Survey. MAY 1994 31 STAT'ISTICAL APPENDIX TABLE A.6 MATURITIES OF BANK CLAIMS ON DEVELOPING COUNTRIES US$ millions 1993Q2 More than Less than I year and less More than Estimated Short-term Country group or country 1992 Total I year than 2 years 2 years Unollocated short-term (96 of total) All developing countries 587,388 589,206 308,275 40,800 217,264 22,867 265,002 45 Sub-SaharanAfrica 32,415 30,730 17,610 2,235 9,579 1,306 15,489 50 EastAsiaand Pacific 151,997 158,033 100,764 9,019 40,739 7,511 92,200 58 Europe and Central Asia 147,695 147,716 60,492 14,784 65,498 6,942 44,147 30 Latin America and the Caribbean 187,381 186,087 94,823 7,674 78,276 5,314 85,305 46 North Africa and the Middle East 53,171 51,791 28,671 5,965 16,273 882 23,209 45 SouthAsia 14,729 14,849 5,915 1,123 6,899 912 4,652 31 Severely indebted middle-income 212,000 208,621 106,003 11,451 85,875 5,292 91,897 44 Albania 382 401 355 1 36 9 343 86 Algena 14,684 14,394 5,595 2,134 6,512 153 3,201 22 Angola 2,01 1 1,799 1,177 146 466 10 1,052 58 Argentina 30,261 27,509 16,452 666 9,519 872 15,052 55 Bolivia 220 181 142 10 22 7 133 73 Brazil 51,407 52,197 28,470 3,070 19,289 1,368 23,765 46 Bulgaria 7,638 7,107 4,528 318 2,048 213 4,011 56 Cameroon 1,424 1,266 598 120 529 19 450 36 Congo 747 611 300 47 260 4 235 38 C6te d'lvoire 2,452 2,298 1,934 109 226 29 1,795 78 Ecuador 3,043 2,873 1,550 155 1,089 79 1,400 49 Jamaica 549 433 206 28 157 42 162 37 Jordan 1,540 1,364 746 98 503 17 619 45 Mexico 53,879 55,728 25,836 2,010 26,198 1,684 24,149 43 Morocco 4,888 4,558 1,330 421 2,795 12 700 I5 Panama 21,397 21,180 10,948 1,104 8,616 512 9,923 47 Peru 2,566 2,445 1,674 77 688 6 1,565 64 Poland 1 2,366 11,728 3,776 923 6,866 163 2,979 25 Syrian Arab Republic 546 549 386 14 56 93 363 66 Severely indebted low-income 24,503 23,651 10,896 2,204 10,007 544 8,981 38 Moderatelyindebted low-income 43,813 45,950 25,941 3,218 15,252 1,539 22,112 48 Moderately indebted middle-income 130,095 128,086 48,936 11,147 63,786 4,217 35,881 28 Selected countriesa 214,172 219,237 117,058 14,652 76,615 10,9 12 103,371 47 Chile 9,699 10,105 5,368 416 4,191 130 5,071 50 China 30,198 28,112 11,402 2,1 18 12,580 2,012 9,648 34 Colombia 6,928 7,103 3,267 441 3,237 158 2,811 40 Egypt 4,129 3,550 1,957 357 1,214 22 1,571 44 Hungary 8,859 8,923 2,290 939 4,616 1,078 1,331 Is India 11,101 1 1,218 3,975 844 5,843 556 2,988 27 Indonesia 28,417 30,341 19,161 ,998 8,256 926 16,714 55 Korea, Rep. of 38,730 39,707 28,254 1,978 7,281 2,194 26,088 66 Malaysia 8,475 10,668 5,720 640 3,418 890 5,399 51 Nigeria 4,154 3,798 1,385 508 1,867 38 1,061 28 Philippines 6,874 5,861 2,332 382 2,782 365 2,098 36 Thailand 22,959 25,917 17,932 1,666 5,458 861 16,653 64 Turkey 15,455 17,250 8,816 1,968 5,248 1,218 7,130 41 Venezuela 18,194 16,684 5,199 397 10,624 464 4,808 29 Offshore banking centers 484,956 490,498 405,377 12,343 60,139 12,639 395,800 81 Oilexporters 132,598 128,635 56,939 12,486 57,231 1,979 43,125 34 DRS reporters 108,918 103,295 39,034 9,742 53,031 1,488 26,823 26 DRS reporters 573,979 578,454 299,100 38,498 220,662 20,194 257,110 44 Note: See table A. I I for country classifications. a. Most of these countries are also included in the indebted country groups. Source: Bank for International Seftlements, The Maturity and Sectoral Distribution of Intemational Bank Lending. 32 FINANCIAL FLOWS AND THE DEVELOPING COUNTRIES TABLE A.7 FUNDS RAISED ON INTERNATIONAL CAPITAL MARKETS US$ millions Count,y group or country 1990 1991 1992 1993 1992Q3 1992Q4 1993QI 1993Q,2 1993Q3 1993Q4 All developing countries 31.900 39,979 40,391 76,137 8,945 10,876 15,008 16,298 19.206 25,626 Bonds 7,328 13,873 21,408 55,871 5,026 6,401 10,471 11,225 13,041 21,134 International 5,380 10,067 13,656 39,565 2,769 3,635 6,643 8,371 9,685 14,866 Foreign 1,948 3,806 7,753 16,306 2,257 2,766 3,829 2,854 3,355 6,268 Loars 24,572 26,106 18,983 20,266 3,9 18 4,475 4,537 5,072 6,165 4,492 International 23,872 25,875 18,737 20,069 3,9 10 4,361 4,512 4,999 6,066 4,492 Foreign 701 231 245 197 8 114 25 74 99 Sub-Saharan Africa 756 689 1,273 102 45 139 ...1 2 90 East Asia and Pacific i4,808 18,228 16,687 27,541 4,5 10 5,223 5,206 6,317 6,391 9,628 Europe and Central Asia 0,247 7,191 9,642 20,264 2,535 3,013 5,921 2,857 4,949 6,537 Latin America and the Caribbean 4,242 8,688 9,518 27,326 1,709 2,501 3,667 7,074 7,627 8,959 Middle East and North Africa 128 4,861 3,070 337 60 .. 216 50 72 SouthnAsia 1,720 322 201 567 86 ... . 155 412 Severely indebted middle-income 2,617 7,944 8,307 22,686 1,749 2,151 3,392 5,819 5,169 8,306 Algeria ..6 I .. . .. Angola I115 325 1 2 ...,1 2 Argentina ,. 725 1,529 6,473 684 250 410 531 2,092 3,440 Bolivia Brazil 1,480 3.010 6,449 355 360 820 1,624 1,850 2,155 Cameroon 100 .....,.. Congo . .. .. ., C8te dIlvoire . .. Ecuador . .. .. Jamaica .. 30 . ,. .. Jordan... ...,. Mexico 2,350 5,568 3,374 9,751 650 1,541 2,162 3,664 1,215 2.71 1 Morocco 52 .. 60 .. 60... Panama . .. ,. .. Poland ..5 9 ..... Syrian Arab Republic , .. ., .. Severely Indebted low-income 385 lOS 96 72 .. 96 ..72 Moderately indebted low-income 7.338 6,130 2.957 4.383 1.146 551 426 773 991 2,194 Moderately indebted middle-income 9,458 4,798 7,641 16,688 .656 2,291 3,192 2,958 4,997 5,542 Selected countries' 20,476 21,754 23,489 42,248 6,232 7,087 8,176 8,767 1 1,130 14,175 Chile 285 .. 350 775 .. 250 .. 333 342 100 China 1,514 2,595 4,043 6,756 924 1,742 2,044 1,836 1,794 1,082 Colomnbia .. 200 .. 621 . .56 325 ,. 240 Hungary 987 1,378 1,446 5,071 240 618 1,418 281 1,331 2,041 India 1,242 226 201 475 86 ... . 155 320 Indonesia 5,462 5,639 2,641 3.726 .015 521 426 773 836 1.691 Korea,Rep.or 3,982 6,437 5,204 7,719 .612 1,322 1,117 1,893 1,228 3,481 Malaysia 730 512 1,271 1,61 1 401 193 447 394 479 292 Philippines 71I5. . 1,250 . . 170 ,. 275 805 Thailand 1,465 1,907 2,718 5,550 557 1,018 951 1,132 1,701 1,767 Turkey 2,498 2,280 4,580 5,763 ,396 1,422 1,330 1,344 920 2,1I 69 Venezuela 1,595 581 1,035 2,931 . . 218 457 2,068 187 Offshore banking centers 4,634 2,491 2,058 9,476 157 643 I ,786 I1,288 910 5,492 Oil exporters 6,862 5.923 4,445 3.503 85 100 434 605 2,1I52 31I2 DRS reporters 4,961 1,018 1.460 3.157 .. 100 279 485 2,080 312 OECD countHes 308,764 368,375 392,920 510,550 10 .596 91,746 141,008 137,237 127,100 1 05,205 Multilateral institutions 15,418 15,000 20,874 20,71 1 4,218 6,266 7,930 3,157 5,583 4,041 Other 644 1,006 1,961 3,037 320 466 184 1,423 1,084 346 Totalb 361,489 432,470 438,275 619,986 115,251 109,997 165,925 159,442 153,908 140,71 1 ..Not availaole. Nate; See tab.c A. I I for country, classifications, a. Most of these countries are also included in the indebted countr-y groups. b. Includes all developing countries, offshore banking centers, OECD countries, multilateral institutions, and the category "other." Source: OECD, Finonciol Stotistics Monthly, Part i. MAY 1994 33 STATISTICAL APPENDIX TABLE A.8 SECONDARY MARKET DEBT PRICES Percentoge offoce value Country group or country 1991Q3 199 1Q4 1992QI 1992Q2 1992Q3 I992Q4 1993Q 1 1993Q2 1993Q3_ 1993Q4 i994QI Severely indebted middle-incomea 37 34 37 39 39 37 37 44 42 56 25 Albania 0 0 0 0 0 0 0 0 5 5 10 Algeria 86 91 83 87 92 91 95 100 0 64 48 Angola 20 20 2C 24 25 22 20 18 18 18 20 Argentinab 39 38 42 50 50 48 50 53 61 69 52 Bolivia 9 11 10 12 IS 16 16 16 0 0 0 Brazil' 36 31 36 33 33 30 30 39 46 53 0 Bulgaria 21 20 18 17 16 3 14 21 26 4 35 Cameroon 0 IS 13 10 12 2 13 14 13 15 23 Congo 4 4 4 5 6 6 6 8 9 9 13 C6te d'lvoire 8 9 8 9 7 5 6 8 13 18 20 Ecuador' 26 24 22 30 27 28 27 32 34 52 40 Jamaica 75 76 74 74 74 71 76 79 76 76 85 Jordan 25 30 3C 34 34 35 35 35 44 52 48 Mexicoe 60 62 63 65 66 65 70 73 76 84 69 Morocco 53 47 42 46 47 47 52 67 72 81 64 Panama 27 21 28 32 33 29 30 32 38 61 54 Peru i7 13 14 15 15 9 24 32 43 68 46 Poland' 26 23 20 23 26 25 28 32 35 50 32 Other selected countries Chile 88 90 88 89 91 91 92 93 94 95 94 Costa Ricag 52 51 51 59 63 60 64 68 75 82 69 Egypt 45 46 46 47 45 45 46 46 46 46 46 Honduras 20 27 27 31 33 35 31 31 31 31 34 Hungary 65 0 C 0 0 0 0 0 0 0 0 Nicaragua 9 8 8 9 7 7 8 0 10 10 9 Nigeria 0 0 39 40 34 39 42 42 53 60 42 Philippines' 54 SI SI 59 57 57 64 68 77 82 66 Senegal 41 43 38 37 0 0 23 0 32 38 34 Uruguay' 70 75 70 70 75 75 65 72 80 0 0 Venezuelai 70 68 58 63 62 57 59 68 70 74 49 Not available. Note: Bid price, a Weighted by commercia bank debt outstanding (Syria is not included in these caculations). b. Guaranteed Refnancing Agreement (GRA). Prices after March 1 993 refer to par bonds offered under the Brady initiative. c. Multi-Year Deposit Facility Agreement (MYDFA). d. Multi-Year Refinancing Agreement (MYRA). e. Prices after February 1990 refer to par bonds offered under the Brady initiative. f. Pr ces after August 1 990 refer to par bonds offered under the Brady in t ative. g. Pr ces after May 1990 refer to Senes A par bonds offered under the Brady initiative. h. Public sector restructured debt, including Central Bank of the Philippines. Prices after January 1990 refer to restructured loans offered jnder the Brady initiative. Prces after December 1 990 refer to par bonds offered under the Brady initiativer 1988 Debt Deferral and Restructuring Agreement (DDRA). Source: Salomon Brothers, Euroweek, LDC Debt Report, lnternotionoi Financing Review, and World Bank data 34 FINANCIAL FLOWS AND THE DEVELOPING COUNTRIES F A TIC A{'.AL A P 5NiEN \L TABLE A.9 NET FOREIGN DIRECT INVESTMENT FLOWS TO DEVELOPING COUNTRIES US$ millions Country group or country 1987 1988 1989 1990 1991 1992 j993a All developing countries 14,534.1 21,204.4 24,7 0.2 26,339.8 36,876.4 47,267.5 56,283.0 Sub-Saharan Africa 1,392.9 1,133.8 2,607.9 856.0 1,774.0 1.613.5 1,765.0 East Asia and Pacific 4,486.5 7,602.1 9,085.9 11,038.2 14,029.5 20,487.5 25,462.0 Europe and Central Asa 1,302.3 2,260.4 3,480.9 4.711.7 7,011.5 8,529.6 8,987.0 LatinAmerica and the Caribbean 5,777.2 7,999.2 7,082.8 7.668.9 1 2,374.6 14,506.5 17.510.0 Middle East and North Africa , 167.9 1,882.6 1,965.8 1,595.7 1,211.2 1,564.4 1,892.0 South Asia 407.3 326.3 486.9 469.3 475.6 566.0 667.0 Memo item Eastern Europe 12.0 5.0 268.3 300.1 2,449.0 4,078.8 4,140.0 Severely indebted middle-income 5,104.0 7,258.5 6,046.8 5,658.1 9,814.8 13,004.2 15,745.0 Albania 0.0 0.0 0.0 0.0 0.0 0.0 Algeria 3.7 13.0 12.1 0.3 11.6 12.0 Angola 19.0 31.0 200.0 -334.8 664.5 288.0 Argentina -19.0 1,147.0 1,028.0 1,836.0 2,439.0 4,179.0 Bolivia 38.1 -10.1 -24.4 27.2 52.0 93.1 Braz 1 1,225.0 2,969.0 1,267.0 901.0 972.0 1,454.0 Bulgaria 0.0 0.0 0.0 4.0 56.0 42.0 Cameroon 12.0 67.3 0.0 -62.3 -21.1 10.0 Congo 43.4 9.1 0.0 0.0 0.0 0.0 Cote d'vo re 87.5 51.7 40.8 47.7 46.1 49.1 Ecuador 75.0 80.0 80.0 82.0 85.0 85.0 Jamaica 53.4 -12.0 57.1 137.9 127.0 86.5 Jordan 39.5 23.7 -1.3 37.6 -1 1.9 40.7 Mexico 3,246.0 2,594.0 3,037.0 2,632.0 4,762.0 5,366.0 Morocco 59.6 84.5 167.1 65.1 319.9 423.6 Panama 56.8 -51.7 36.4 -17.6 -40.3 -0.8 Peru 32.0 26.0 59.0 41.0 7.0 127.0 Poland 12.0 15.0 1 1.0 89.0 291.0 678.0 Syrian Arab Republ c 7.0 21.0 74.0 71.0 62.0 67.0 Severely indebted low-income 1,889.7 1.691 .3 3,477.5 1,764.0 1,254.8 1,655.9 1,752.0 Moderately indebted low-income 727.9 863.5 1,161. 1,502.1 1,906.6 2,225.5 2,495.0 Moderately indebted middle-income 2,315.4 3,595.9 3.490.3 4,210.5 7,650.3 7.787.8 8,677.0 Selected countriesb 6,829.0 9,846.7 3,859.9 13,969.0 19,909.1 25,927.2 31.110.0 Chile 230.0 141.0 184.0 249.0 563.0 737.0 China 2,314.0 3,194.0 3,393.0 3.487.0 4,366.0 11,156.0 Colombia 319.0 203.0 576.0 500.0 457.0. 790.0 Egypt 947.7 1,190.0 1,250.2 734.0 253.0 459.0 Hungary 0.0 0.0 0.0 0.0 1,462. 1,479.2 India 212.0 91.0 252.0 162.0 141.0 151.0 Indonesia 385.0 576.0 682.0 1,093.0 1,482.0 1,774.0 Korea, Rep. of 601.0 87 .0 758.0 715.0 1, 16.0 550.0 Malaysia 422.7 719.4 1,667.9 2,332.5 4,072.6 4,1 17.6 Nigeria 602.7 376.9 1,882.3 587.9 712.4 896.6 Philipp nes 307.0 936.0 563.0 530.0 544.0 228.0 Thailand 351.9 1.105.4 1,775.5 2,443.6 2,014.0 2,1 15.8 Turkey 15.0 354.0 663.0 684.0 810.0 844.0 Venezuela 21.0 89.0 213.0 451.0 1,916.0 629.0 Not available. Note: Table includes data for 148 developing countries, of which 1 29 report to the World Bank Debtor Reporting System. See table A. I for country classifications. a Projection. b. Most of these countries are also included in the indebted country groups Source: World Bank, Debtor Reporting System, IMF. MAY 1994 35 STATISTICAL APPENDIX TABLE A. IO EMERGING STOCK MARKETS Market capitalization Value of stock traded Price eamings ratio (US$ millions) (US$ millions) (percent) Economy 1993Q2 1993Q3 1993Q4 l 993Q2 1993Q3 1993Q4 1993Q2 1993Q3 1 993Q4 Argentina 26,968 3 ,81 1 43,967 2,043 2,393 3,069 33 39 49 Brazil 76,023 93,205 99,430 10,791 3,345 17,044 17 14 13 Chie 34,725 35,530 44,622 573 713 905 16 17 20 Colombia 5,280 6,869 8,755 181 217 255 15 18 26 Greece 9,410 10,425 12,319 331 816 1,004 8 9 10 Hungary 498 655 812 8 35 32 4 18 19 India 59,0 1 6 71,811 97,976 3,424 4,977 5,079 26 33 40 Indonesa 17.101 20,697 32,953 1,403 2,258 3,68 18 22 29 Jamaica 3,1 18 1,977 1,469 74 31 99 14 12 7 Jordan 5,203 4,909 4,891 514 371 166 19 18 18 Korea, Rep. of 118,839 114,462 139,420 65,547 30,308 73,855 24 21 25 Malaysia' 118,829 153,540 230,093 33,800 35,764 72,902 26 30 44 Mexico 129,983 145,154 200,671 9,361 15,699 28,939 12 14 19 Nigeria 1,199 1,014 1,029 4 3 3 6 6 8 Pakistan 7,078 7,622 11,602 32 1 387 872 1 8 8 28 Peru 3,212 4,169 5,113 256 493 635 22 35 44 Philippines 16,611 19,703 40,040 1,061 1,457 3,08 1 1 7 22 39 Poland 849 1,470 2,706 241 638 1,056 10 17 33 Portugal 10,443 12,006 12,417 993 ,001 1,984 3 16 18 Sri Lanka 1,555 1,804 2,498 45 126 185 13 16 28 Taiwan (China) 121,973 108,988 195,130 81,212 40,634 121,838 21 21 35 Thailand 62,162 70,470 130,510 9,365 15,341 40,772 14 16 28 Turkey 22,880 30,282 37,496 4,766 5,850 8,923 18 26 36 Venezuela 7,125 6,090 6,587 598 441 552 19 14 7 Zimbabwe 667 988 1,44 3 16 31 4 6 9 Total 860,747 955,651 ,363,947 226,915 173,314 386,962 414 478 641 Not available. a. Data for Malaysian-incorporated companies only. Source: International Finance Corporation, Emerging Stock Morkets Foctbook. 36 FINANCIAL FLOWS AND THE DEVELOPING COUNTRIES STATISTICAL APPENDIX TABLE A.1 I COUNTRY GROUPS East Asia and Pacific Former Yugoslavia* Guatemala* Tun sia* Ghanae American Samoa Gibraltar-* Guyana* Yemen* Guhea' Cambodia*" Greece** Haiti* Guinea-Bissau* China' Hungary Honduras' South Asia Kenya' Fij* Isle of Man Jamaica* Afghanistan`S Lesotho* Guam Malta* Martin que Bangladesh* Madagascar* Indonesia* Poland* Mexico' Bhutar* Malawi* Kiribati- Portugal* Nicaragua* India* Mali* Korea, D.P.R. of- Romania' Paraguay* Maldives* Maurtania Korea. Rep, of* Slovak Republic* Peru* Nepal* Mauntus* Lao P.D.R.' Turkey* Puerto Rico Pakistan* Mayotte Malaysia* St. Kitts and Nevis* Sri Lanka* Mozamricue Marshall slands Latin America and St. Lucia* Namibia` M crones a the Caribbean St. V ncert' Sub-Saharan Africa Niger' Mongolia Ant gua and Barbuda** Surname** Angolae Nigeria* Myanmar' Argentina' Trin dad and Tobago' Benin* Reun on New Caledonia- Aruba Uriguay* Botswana* Rwanda* Papua New Guinea Belize* Venezuela* Burkina Faso* Sao Tome and Principe' Phi ppines Bolivia* Burundi* Senegal* Solomon Islands* Brazil* North Africa and Cameroon* Seychelles' Thailand* Chile* the Middle East Cape Verde* Sierra Leone* Tonga' Colombia* Algera* Central African Repubi c* Somalia* Vet Namrr Costa Rica* Egypt, Arab Rep of' Chad* South Africa** Western Samoa* Cuba- Iran, Islamic Rep. of` Comoros' Sudan' Dominica* Iraq** Congc* Swaziland* Europe and Dom oican Republic* Jordan' Cote d'lvoire* Tarzania' Central Asia Ecuador' Libya- Djibouti* Togo* A baniae El Salvador* Morocco' Lquatoral GL nea* Uganda* Bulgaria* French Guiana Oman* Ethiopa* Zaire* Czech Republic' Grenada* Saudi Arab a" Gabon Zambia* Former Soviet Union* Guadeloupe Syrian Arab Republic Gambia, The' Zimbabwe* Severely indebted Peru Lberia Moderately indebted Moderately indebted middle-income Poland Madagascar low-income countries' middle-income countriesa Syr an Arab Republc Mai Bangladesh countriesa Albania Mauritania Comoros Chile Alger a Severely indebted low- Mozamb que Gamb a, The Colombia Arngola income countriesa Myanmar Guiriea Costa Rica Argentina Afghanistan- N caragua India Dominican Republic Bolivia Burundi Niger Indonesa Gabon Brazil Cambodia** Nigeria Malaw Greece` Bulgaria Centra African Republic Rvwanda Maldives Guatermala Cameroon Egypt, Arab Rep. of Sao Tome and Principe Nepal Hungary Congo Equatoria Gu rea Sierra Leone Pakistan Papua New Guinea Cote d'lvoire Ethiopia Somalia Togo Philippines Ecuador Ghana Sudan Yemcn Russian Federation Jamaica Guinea-Bissau Tanzan a Z mbabwe Senegal Jordan Guyana Uganda Tunisia Mexico Honduras Vet Nam Turkey Morocco Keny, Za re Uruguay Panama Lao P.D.R. Zambia Venezue a Offshore banking Macao` Brunei Saudi Arabia centersb Netherlands Antilles- Congo* Trinidad and Tobago* Bahamas Panama* Former Soviet Union* Un ted Arab Emirates Bahrain- Singapore Gabon* Venezuela* Barbados' Vanuatu* Iran, Isamic Rep. of' Bermuda Iraq** Cayman Is ands Oil exporters Libya** Hong Kong Algeria' Niger al Lebanon' Angoa* Oman* Liberia* Bahrain* Qatar * DRS reporter. *1 Non-DRS economY. The remaining countries Include selected high-income and non-OECD middle-income countries. The Debtor Reporting System (DRS), set up in 1951 to monitor statistics on the external debt of develop ng countries, s maintained by the staff of the Debt and Intemational Finance Division of the Worid Bank's International Economics Department. The World Bank s the so e repos tory for these statistics on a loan-by-loan basis. Note: Country group compositon has been modtfied to reflect the annual updatng of GNP per capita and related debt indicators. a. All countries in the group are DRS reporters, except those for whtch it is otLherwise iridicated. b. Offshore banking cen.ers are not included in any otner country group except for o l exporters MAY 1994 37 New 1994 Editions of World Bank Reports Global Economic Prospects and the Developing i-------------------------------------------- Countries 1994 J Yes, please send me the pubications The economic recession of the early 1990s limited economic growth p in the industrial countries to about 1 percent a year. Performance Global Economic Prospects and the Developing Countries 1994 in the transition economies of Eastern Europe and Central Asia 102 pages / Price $10.95 fared worse, with economic activity contracting sharply. S Stock No. 12570 This report highlights the improvement in the performance of the remainder of the developing world, where economic activity Social Indicators of Development 1994 grew at rates in excess of 4 percent a year despite recession in major 390 pages / Price $24.95 _____Stock No. 44788 industrial countries and a decline in real commodity prices. This was due mainly to better domestic policies, low international real l Social Indicators of Development 1994-Data on Diskette interest rates, and a surge in private capital flows. The strong over- i Stock No. 12573/ Price $70.00 all performance of developing countries was heavily influenced by rapid growth in some 20 middle-income developing countries and Payment in China, which benefited from significant private capital inflows. Please add $5.00 shipping and handling. For airmail delivery outside the The 1994 edition is fully illustrated with detailed tables and ttional items Fo payment in local cte yrst item and $f600 for each addi- graphs throughout the text that highlight key points and help sim- l in your area. Prices vary by country. plify complex economic forecasts. l Enclosed is my check for US$ . . drawn on a US bank and payable to the World Bank in US dollars. For payment in local currency, Social Indicators of Development 1 994 : please ask for the distributor in your area. The 1994 edition of this annual statistical compilation allows read- Charge my: ers to monitor and evaluate social progress in the world. It includes the latest available estimates of fertility, mortality, illiteracy, access I _ VISA _ MasterCard American Express to health care, shares of GDP for selected social expenditures, and much more. This edition has been organized to highlight statistics on Credit CardAccount Number Expiration Date poverty. Priority Poverty Indicators (PPIs) are presented on the first page of each country table. Other indicators covering human ! Signature resources, natural resources, and expenditures and investment in human capital are presented on the second page of each country Name: l table. The PPIs are used for monitoring levels of poverty and related Title: l trends and, with the other indicators, provide a framework for l assessing human welfare in low- and middle-income countries. l Company l Country tables are shown for 190 economies, including for the 15 Address:__ economies of the former Soviet Union. In addition to the comprehensive individual country reviews, i there is a concise table of selected indicators for quick cross- City/State/Postal Code:__ national and regional comparisons. l Country: Published for the WorldBank by Johns Hopkins University Press 1037 L… Social Indicators of Development 1994-Data on Diskette Cut out form above and mail to: The World Bank Each diskette package includes the complete *STARS* retrieval PO Box 7247-8619 software and data on a 31/2" diskette, and requires at least 512K Philadelphia, PA 19170-8619 memory and MS-DOS version 2.1 or higher. USA To have your order shipped faster, call (202) 473-1155 to charge by credit card, or send this completed order coupon by facsimile to (202) 676-0581. New World Bank Quarterlies Financial Flows and the Developing Countries i Y Yes, please enter my subscription for the This new subscription newsletter gives financial decisionmakers I access to the World Bank's timely and concise analysis of develop- new World Bank quarterlies, as indicated ing-country debt and international financial flows. I ____Commodity Markets and the Developing Countries Each quarterly issue examines the latest events and trends USt1s hDyeas affecting developing-country access to international capital and l looks at capital markets, emerging stock markets, foreign direct i Financial Flows and the Developing Countries investment, debt flows, and more. i US$150/year l Approximately 40 pages/ISSN 1020-0975 Charoximately 40sue pages/IS 1023 0 Enclosed is my check for US$ . . drawn on a US bank and payable to the World Bank in US dollars. For payment in local currency, Annual Subscription $150 please ask for the distributor in your area. I Charge my: Commodity Markets and the Developing VISA MasterCard American Express Countries This new quarterly review discusses recent developments in 34 l -__ primary commodity markets and their likely impact on prices. Credit Card Account Number Expiration Date World Bank trade analysts look at production, consumption, and trade patterns to pinpoint why some commodities may thrive l Signature while others may falter. Each issue provides succinct-yet sub- l stantive-assessments that keep readers abreast of the current Name: l market climate for Title: l * Food Company: * Agricultural raw materials * Energy Address:__ * Fertilizers Approximately 40 pages/ISSN 1020-0967 Charter Issue December 1993 l City/State/Postal Code:__ Annual Subscription $150 ! Country: | Bill my organization. Institutional customers only. Please include a I purchase order. I Name: ll l Title: l ________________________________________________________________ I Company: Cut out form at right and mail to: I Address:__ The World Bank PO Box 7247-7956 Philadelphia, PA 19170-7956 City/State/Postal Code:_l Country: To have your order shipped faster, call (201) 476-2192 to charge by credit I card, or send this completed order coupon by facsimile to (201) 476-2197. i 1036 L…-- - 5 _ _ _- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -j FINANCIAL FLOWS AND THE DEVELOPING COUNTRIES A WORLD BANK QUARTERLY Financial Flows and the Developing Countries is produced by the Debt and International Finance Division of the International Economics Department of the World Bank. For information about the contents, call (202) 473-3813 or fax (202) 477-0966. The opinions expressed are those of the authors and should not be attributed in any manner to the World Bank, to its Board of Executive Directors, or to the countries they represent. It is published quarterly in February, May, August, and November. The annual subscription rate is $150.00. Send subscription orders to World Bank Publications, Box 7247-7956, Philadelphia, PA 19170-7956, USA. © 1994 The International Bank for Reconstruction and Development/The World Bank 1818 H Street, NW, Washington, DC 20433, USA All rights reserved Manufactured in the United States of America Vol 1. no.3 ISSN 1020-0975 ISBN 0-8213-2840-9 Sectoral Library. Q Pwinted on recyled paper N 145 ( 1)