Reforming Government Debt Markets in MENA

This paper examines the current stage of development of government securities markets in the non-GCC MENA region focusing in five countries that have government bond markets with a minimum size and greater potential for market development: Egypt, J...

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Bibliographic Details
Main Authors:	Garcia-Kilroy, Catiana, Silva, Anderson Caputo
Format:	Policy Research Working Paper
Language:	English
Published:	2012
Subjects:	ACCOUNTING ALTERNATIVE INVESTMENTS ARBITRAGE ASSET CLASS AUCTION AUCTIONS AVERAGE DEBT BALANCE SHEET BANK DEBT BANK LIQUIDITY BANKING SECTORS BOND FUND BOND FUNDS BOND HOLDERS BOND MARKET BOND MARKET CAPITALIZATION BONDS BUY-BACKS CAPACITY BUILDING CAPITAL ACCOUNT CAPITAL LOSSES CAPITAL MARKET CAPITAL MARKET DEVELOPMENT CAPTIVE INVESTORS CASH FLOW CDS CENTRAL BANK CENTRAL BANKS CENTRAL GOVERNMENT DEBT CENTRAL SECURITIES DEPOSITORY CHECKS CLEARING HOUSE COLLATERAL CREDIT MARKETS CREDIT RATING CREDIT RATINGS CREDIT RISK CURRENT ACCOUNT DEFICITS CURRENT ACCOUNT SURPLUSES DEBT INSTRUMENTS DEBT LEVELS DEBT MANAGEMENT DEBT MANAGEMENT POLICY DEBT MARKET DEVELOPMENT DEBT MATURITIES DEBT MATURITY DEBT SECURITIES DEPOSIT DERIVATIVES DEVELOPING GOVERNMENT BOND DEVELOPING GOVERNMENT BOND MARKETS DEVELOPMENT OF DEBT MARKETS DOMESTIC DEBT DOMESTIC DEBT MARKET DOMESTIC DEBT MARKETS DOMESTIC EQUITY DOMESTIC FINANCIAL MARKETS DOMESTIC MARKETS DOMESTIC TRADABLE DEBT EMERGING MARKET EMERGING MARKET ECONOMIES EMERGING MARKETS EXCESS LIQUIDITY EXCHANGE RATES EXPENDITURE EXTERNAL DEBT FACE VALUE FINANCIAL INSTITUTIONS FINANCIAL INSTRUMENTS FINANCIAL MARKET FINANCIAL RISK FINANCIAL RISKS FINANCIAL STABILITY FINANCIAL SYSTEM FISCAL DEFICITS FISCAL POLICIES FIXED COUPON FLOATING RATE FOREIGN CURRENCY FOREIGN EXCHANGE FOREIGN EXCHANGE MARKET FOREIGN EXCHANGE MARKETS FOREIGN INVESTOR FOREIGN INVESTORS GLOBAL BOND GLOBAL BOND INDICES GLOBAL CAPITAL GLOBAL CAPITAL MARKETS GOVERNMENT BOND GOVERNMENT BOND MARKETS GOVERNMENT DEBT GOVERNMENT DEBT MARKET GOVERNMENT DEBT MARKETS GOVERNMENT FINANCING GOVERNMENT SECURITIES GOVERNMENT SECURITIES AUCTION GOVERNMENT SECURITIES MARKETS GOVERNMENT SPENDING ILLIQUID MARKETS ILLIQUID SECURITIES INDEXED BONDS INFLATION INSTITUTIONAL INVESTOR INSTITUTIONAL INVESTORS INSTRUMENT INTEREST RATE INTERMEDIATION SPREADS INTERNATIONAL BANK INVESTMENT ALTERNATIVES INVESTMENT FLOWS INVESTMENT FUND INVESTOR BASE INVESTOR PARTICIPATION ISSUANCE ISSUANCE OF LONG-TERM SECURITIES ISSUANCES LACK OF COMPETITION LEGAL AGREEMENT LEVEL OF DEBT LIABILITY LIABILITY MANAGEMENT LIQUID BENCHMARKS LIQUID DOMESTIC DEBT MARKET LIQUIDITY MANAGEMENT LIQUIDITY RISK LOCAL CURRENCY LOCAL DEBT LOCAL DEBT MARKETS LONG-TERM DEBT LONG-TERM YIELDS MACROECONOMIC CONDITIONS MARKET CAPITALIZATION MARKET DEVELOPMENT MARKET EFFICIENCY MARKET INDICES MARKET INFRASTRUCTURE MARKET MAKERS MARKET MAKING MARKET PARTICIPANTS MARKET PLAYERS MARKET PRICES MARKET REFORMS MARKET SIZE MARKET STRUCTURE MARKET TRANSPARENCY MARKETABLE DEBT MATURITIES MATURITY MATURITY EXTENSION MATURITY SPECTRUM MATURITY STRUCTURE MATURITY STRUCTURES MATURITY TRANSFORMATION MICROSTRUCTURE MONETARY POLICIES MONETARY POLICY MONEY MARKET MONEY MARKETS MUTUAL FUNDS OPPORTUNITY COST OUTSTANDING DEBT PORTFOLIOS POTENTIAL INVESTORS PRICE DISCOVERY PRICE FORMATION PRICE TRANSPARENCY PRIMARY DEALER PRIMARY DEALER SYSTEMS PRIMARY DEALERS PRIMARY MARKET PRIMARY MARKETS PRIVATE PLACEMENTS PUBLIC DEBT PUBLIC DEBT MANAGEMENT PUBLIC DEBT MARKET PUBLIC DEBT MARKETS REMITTANCES REPO REPO FRAMEWORK REPO FRAMEWORKS REPO MARKET REPO MARKETS REPO TRANSACTION REPOS RESERVE RESERVE REQUIREMENTS RESERVES SECONDARY MARKET SECONDARY MARKET DEVELOPMENT SECONDARY MARKET LIQUIDITY SECONDARY MARKET PRICES SECONDARY MARKET TRADING SECONDARY MARKET TRANSACTIONS SECONDARY MARKETS SECONDARY TRADING SETTLEMENT SETTLEMENT INFRASTRUCTURE SHORT-TERM TREASURY BILLS SPOT MARKET SWAPS T-BILL T-BILLS T-BOND T-BONDS TAX TIME DEPOSITS TRADING TREASURY TREASURY BILLS TREASURY BONDS VALUATION YIELD CURVE ZERO COUPON
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20110324104519 http://hdl.handle.net/10986/3377

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Summary:	This paper examines the current stage of development of government securities markets in the non-GCC MENA region focusing in five countries that have government bond markets with a minimum size and greater potential for market development: Egypt, Jordan, Lebanon, Morocco and Tunisia. The analysis focuses on the five key building blocks that normally sustain deep and liquid public debt markets: (i) money markets; (ii) primary market (issuance policy and placement mechanisms); (iii) secondary market organization; (iv) investor base; and (v) clearing and settlement infrastructure. The study shows that despite country differences, several common weaknesses in the key building blocks explain the underdevelopment of MENA bond markets. Most important among these are a symbiotic relationship between banks and Governments caused by lack of alternative investments that makes banks act as captive demand and dominate bond markets, opportunistic primary issuance practices, and excess liquidity in the financial system. These demand and supply characteristics have led to highly concentrated buy-and-hold portfolios by banks and State-owned institutions, poor price discovery and lack of liquidity in secondary markets. A set of actions to unlock market development in MENA is proposed involving measures in all key building blocks - from improvements in monetary policy implementation and liquidity management to enhancements in issuance practices, price transparency, and clearing & settlement infrastructure. Measures to improve the role of mutual funds and foster foreign investor presence are also of utmost importance to increase competition and investor diversification in these markets.

Reforming Government Debt Markets in MENA

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