The Transactions Costs of Primary Market Issuance: The Case of Brazil, Chile, and Mexico

The author documents the precise costs of debt and equity issuance, both domestically and internationally, for firms in Brazil, Chile, and Mexico. Costs include investment banking and legal fees, regulatory and exchange listing costs, rating agency...

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Main Author:	Zervos, Sara
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, D.C. 2013
Subjects:	AAA RATING ACCOUNTING ANNUITIES ASSETS BANK CREDIT BANK SERVICES BANKING COSTS BANKING SYSTEM BENCHMARK BOND BOND ISSUANCE BOND ISSUES BOND MARKET BOND MARKETS BONDS CAPITAL MARKETS CAPITAL REQUIREMENTS CAPITALIZATION CASH FLOWS CORPORATE DEBT CORPORATE FINANCE CORPORATE GOVERNANCE CURRENCY DEBT DEBT SECURITIES DEPOSITORY DISCLOSURE DISCLOSURE REQUIREMENTS DOMESTIC CAPITAL MARKETS DOMESTIC EQUITY DOMESTIC FINANCING DOMESTIC INVESTMENT ECONOMIC GROWTH ECONOMIC OUTCOMES EMERGING MARKETS EQUITY CAPITAL EQUITY FINANCING EQUITY MARKETS EQUITY SECURITIES EXPENDITURES EXPOSURE EXTERNAL AUDITORS FACE VALUE FINANCIAL DEVELOPMENT FINANCIAL SECTOR FINANCIAL SYSTEM FISCAL POLICIES FIXED COSTS FIXED INCOME FIXED INCOME SECURITIES GDP INCOME INFLATION INFORMATION DISCLOSURE INFORMATION DISCLOSURE COSTS INSTITUTIONAL INVESTORS INSURANCE INSURANCE COMPANIES INTEREST RATES INTERNATIONAL INVESTMENT BANK INVESTABLE FUNDS INVESTMENT BANKERS INVESTMENT BANKING INVESTMENT BANKS INVESTMENT FUNDS INVESTMENT REGULATIONS INVESTMENT RESTRICTIONS IPO IPOS ISSUERS LIABILITY LIQUIDITY MANDATES MARKET PARTICIPANTS MATURITIES MATURITY MUNICIPALITIES MUTUAL FUND MUTUAL FUNDS PAYOUT PENSION FUNDS PENSIONS PORTFOLIO PORTFOLIO COMPOSITION PORTFOLIOS PRIMARY CAPITAL PRIVACY PURCHASES PUT OPTIONS RAISING CAPITAL RATING AGENCIES RESOURCE ALLOCATION RETAIL INVESTORS RETIREMENT RISK CAPITAL SECURITIES SECURITIES ISSUE SECURITIES MARKETS SECURITIZATION SECURITY LAW STATEMENTS STATISTICAL DATA STOCK EXCHANGE STOCK EXCHANGES STOCK MARKET TELECOMMUNICATIONS TOTAL COSTS TRANSACTIONS COSTS VALUATION WAGES
Online Access:	http://documents.worldbank.org/curated/en/2004/10/5272666/transactions-costs-primary-market-issuance-case-brazil-chile-mexico http://hdl.handle.net/10986/14231

id	okr-10986-14231
recordtype	oai_dc
spelling	okr-10986-142312021-04-23T14:03:21Z The Transactions Costs of Primary Market Issuance: The Case of Brazil, Chile, and Mexico Zervos, Sara AAA RATING ACCOUNTING ANNUITIES ASSETS BANK CREDIT BANK SERVICES BANKING COSTS BANKING SYSTEM BENCHMARK BOND BOND ISSUANCE BOND ISSUES BOND MARKET BOND MARKETS BONDS CAPITAL MARKETS CAPITAL REQUIREMENTS CAPITALIZATION CASH FLOWS CORPORATE DEBT CORPORATE FINANCE CORPORATE GOVERNANCE CURRENCY DEBT DEBT SECURITIES DEPOSITORY DISCLOSURE DISCLOSURE REQUIREMENTS DOMESTIC CAPITAL MARKETS DOMESTIC EQUITY DOMESTIC FINANCING DOMESTIC INVESTMENT ECONOMIC GROWTH ECONOMIC OUTCOMES EMERGING MARKETS EQUITY CAPITAL EQUITY FINANCING EQUITY MARKETS EQUITY SECURITIES EXPENDITURES EXPOSURE EXTERNAL AUDITORS FACE VALUE FINANCIAL DEVELOPMENT FINANCIAL SECTOR FINANCIAL SYSTEM FISCAL POLICIES FIXED COSTS FIXED INCOME FIXED INCOME SECURITIES GDP INCOME INFLATION INFORMATION DISCLOSURE INFORMATION DISCLOSURE COSTS INSTITUTIONAL INVESTORS INSURANCE INSURANCE COMPANIES INTEREST RATES INTERNATIONAL INVESTMENT BANK INVESTABLE FUNDS INVESTMENT BANKERS INVESTMENT BANKING INVESTMENT BANKS INVESTMENT FUNDS INVESTMENT REGULATIONS INVESTMENT RESTRICTIONS IPO IPOS ISSUERS LIABILITY LIQUIDITY MANDATES MARKET PARTICIPANTS MATURITIES MATURITY MUNICIPALITIES MUTUAL FUND MUTUAL FUNDS PAYOUT PENSION FUNDS PENSIONS PORTFOLIO PORTFOLIO COMPOSITION PORTFOLIOS PRIMARY CAPITAL PRIVACY PURCHASES PUT OPTIONS RAISING CAPITAL RATING AGENCIES RESOURCE ALLOCATION RETAIL INVESTORS RETIREMENT RISK CAPITAL SECURITIES SECURITIES ISSUE SECURITIES MARKETS SECURITIZATION SECURITY LAW STATEMENTS STATISTICAL DATA STOCK EXCHANGE STOCK EXCHANGES STOCK MARKET TELECOMMUNICATIONS TOTAL COSTS TRANSACTIONS COSTS VALUATION WAGES The author documents the precise costs of debt and equity issuance, both domestically and internationally, for firms in Brazil, Chile, and Mexico. Costs include investment banking and legal fees, regulatory and exchange listing costs, rating agency fees, and expenditures for marketing and publishing. Her findings suggest that Brazilian firms face similar costs in issuing debt locally or abroad, whereas domestic equity issuance is nearly twice as expensive as debt. While the Chilean domestic corporate debt market is well developed by emerging market standards (size of the market and maturity of issues), Chilean firms can issue debt more cheaply internationally than at home. In addition, while equity financing is cheaper in Chile from a transaction cost perspective, over the past decade most firms have used bonds rather than shares to raise capital. This financing trend is true in all three countries. Finally, Mexican firms can issue debt at the lowest costs of the three, but face the highest equity issuing costs. In addition to documenting these features, the author sheds light on how the investor base in these countries plays a strong role in influencing the ability of firms to access domestic capital markets. 2013-06-27T15:56:19Z 2013-06-27T15:56:19Z 2004-10 http://documents.worldbank.org/curated/en/2004/10/5272666/transactions-costs-primary-market-issuance-case-brazil-chile-mexico http://hdl.handle.net/10986/14231 English en_US Policy Research Working Paper;No.3424 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, D.C. Publications & Research :: Policy Research Working Paper Publications & Research Latin America & Caribbean Brazil Chile Mexico
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	AAA RATING ACCOUNTING ANNUITIES ASSETS BANK CREDIT BANK SERVICES BANKING COSTS BANKING SYSTEM BENCHMARK BOND BOND ISSUANCE BOND ISSUES BOND MARKET BOND MARKETS BONDS CAPITAL MARKETS CAPITAL REQUIREMENTS CAPITALIZATION CASH FLOWS CORPORATE DEBT CORPORATE FINANCE CORPORATE GOVERNANCE CURRENCY DEBT DEBT SECURITIES DEPOSITORY DISCLOSURE DISCLOSURE REQUIREMENTS DOMESTIC CAPITAL MARKETS DOMESTIC EQUITY DOMESTIC FINANCING DOMESTIC INVESTMENT ECONOMIC GROWTH ECONOMIC OUTCOMES EMERGING MARKETS EQUITY CAPITAL EQUITY FINANCING EQUITY MARKETS EQUITY SECURITIES EXPENDITURES EXPOSURE EXTERNAL AUDITORS FACE VALUE FINANCIAL DEVELOPMENT FINANCIAL SECTOR FINANCIAL SYSTEM FISCAL POLICIES FIXED COSTS FIXED INCOME FIXED INCOME SECURITIES GDP INCOME INFLATION INFORMATION DISCLOSURE INFORMATION DISCLOSURE COSTS INSTITUTIONAL INVESTORS INSURANCE INSURANCE COMPANIES INTEREST RATES INTERNATIONAL INVESTMENT BANK INVESTABLE FUNDS INVESTMENT BANKERS INVESTMENT BANKING INVESTMENT BANKS INVESTMENT FUNDS INVESTMENT REGULATIONS INVESTMENT RESTRICTIONS IPO IPOS ISSUERS LIABILITY LIQUIDITY MANDATES MARKET PARTICIPANTS MATURITIES MATURITY MUNICIPALITIES MUTUAL FUND MUTUAL FUNDS PAYOUT PENSION FUNDS PENSIONS PORTFOLIO PORTFOLIO COMPOSITION PORTFOLIOS PRIMARY CAPITAL PRIVACY PURCHASES PUT OPTIONS RAISING CAPITAL RATING AGENCIES RESOURCE ALLOCATION RETAIL INVESTORS RETIREMENT RISK CAPITAL SECURITIES SECURITIES ISSUE SECURITIES MARKETS SECURITIZATION SECURITY LAW STATEMENTS STATISTICAL DATA STOCK EXCHANGE STOCK EXCHANGES STOCK MARKET TELECOMMUNICATIONS TOTAL COSTS TRANSACTIONS COSTS VALUATION WAGES
spellingShingle	AAA RATING ACCOUNTING ANNUITIES ASSETS BANK CREDIT BANK SERVICES BANKING COSTS BANKING SYSTEM BENCHMARK BOND BOND ISSUANCE BOND ISSUES BOND MARKET BOND MARKETS BONDS CAPITAL MARKETS CAPITAL REQUIREMENTS CAPITALIZATION CASH FLOWS CORPORATE DEBT CORPORATE FINANCE CORPORATE GOVERNANCE CURRENCY DEBT DEBT SECURITIES DEPOSITORY DISCLOSURE DISCLOSURE REQUIREMENTS DOMESTIC CAPITAL MARKETS DOMESTIC EQUITY DOMESTIC FINANCING DOMESTIC INVESTMENT ECONOMIC GROWTH ECONOMIC OUTCOMES EMERGING MARKETS EQUITY CAPITAL EQUITY FINANCING EQUITY MARKETS EQUITY SECURITIES EXPENDITURES EXPOSURE EXTERNAL AUDITORS FACE VALUE FINANCIAL DEVELOPMENT FINANCIAL SECTOR FINANCIAL SYSTEM FISCAL POLICIES FIXED COSTS FIXED INCOME FIXED INCOME SECURITIES GDP INCOME INFLATION INFORMATION DISCLOSURE INFORMATION DISCLOSURE COSTS INSTITUTIONAL INVESTORS INSURANCE INSURANCE COMPANIES INTEREST RATES INTERNATIONAL INVESTMENT BANK INVESTABLE FUNDS INVESTMENT BANKERS INVESTMENT BANKING INVESTMENT BANKS INVESTMENT FUNDS INVESTMENT REGULATIONS INVESTMENT RESTRICTIONS IPO IPOS ISSUERS LIABILITY LIQUIDITY MANDATES MARKET PARTICIPANTS MATURITIES MATURITY MUNICIPALITIES MUTUAL FUND MUTUAL FUNDS PAYOUT PENSION FUNDS PENSIONS PORTFOLIO PORTFOLIO COMPOSITION PORTFOLIOS PRIMARY CAPITAL PRIVACY PURCHASES PUT OPTIONS RAISING CAPITAL RATING AGENCIES RESOURCE ALLOCATION RETAIL INVESTORS RETIREMENT RISK CAPITAL SECURITIES SECURITIES ISSUE SECURITIES MARKETS SECURITIZATION SECURITY LAW STATEMENTS STATISTICAL DATA STOCK EXCHANGE STOCK EXCHANGES STOCK MARKET TELECOMMUNICATIONS TOTAL COSTS TRANSACTIONS COSTS VALUATION WAGES Zervos, Sara The Transactions Costs of Primary Market Issuance: The Case of Brazil, Chile, and Mexico
geographic_facet	Latin America & Caribbean Brazil Chile Mexico
relation	Policy Research Working Paper;No.3424
description	The author documents the precise costs of debt and equity issuance, both domestically and internationally, for firms in Brazil, Chile, and Mexico. Costs include investment banking and legal fees, regulatory and exchange listing costs, rating agency fees, and expenditures for marketing and publishing. Her findings suggest that Brazilian firms face similar costs in issuing debt locally or abroad, whereas domestic equity issuance is nearly twice as expensive as debt. While the Chilean domestic corporate debt market is well developed by emerging market standards (size of the market and maturity of issues), Chilean firms can issue debt more cheaply internationally than at home. In addition, while equity financing is cheaper in Chile from a transaction cost perspective, over the past decade most firms have used bonds rather than shares to raise capital. This financing trend is true in all three countries. Finally, Mexican firms can issue debt at the lowest costs of the three, but face the highest equity issuing costs. In addition to documenting these features, the author sheds light on how the investor base in these countries plays a strong role in influencing the ability of firms to access domestic capital markets.
format	Publications & Research :: Policy Research Working Paper
author	Zervos, Sara
author_facet	Zervos, Sara
author_sort	Zervos, Sara
title	The Transactions Costs of Primary Market Issuance: The Case of Brazil, Chile, and Mexico
title_short	The Transactions Costs of Primary Market Issuance: The Case of Brazil, Chile, and Mexico
title_full	The Transactions Costs of Primary Market Issuance: The Case of Brazil, Chile, and Mexico
title_fullStr	The Transactions Costs of Primary Market Issuance: The Case of Brazil, Chile, and Mexico
title_full_unstemmed	The Transactions Costs of Primary Market Issuance: The Case of Brazil, Chile, and Mexico
title_sort	transactions costs of primary market issuance: the case of brazil, chile, and mexico
publisher	World Bank, Washington, D.C.
publishDate	2013
url	http://documents.worldbank.org/curated/en/2004/10/5272666/transactions-costs-primary-market-issuance-case-brazil-chile-mexico http://hdl.handle.net/10986/14231
_version_	1764430800333307904

The Transactions Costs of Primary Market Issuance: The Case of Brazil, Chile, and Mexico

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