Premium
Subnational Bond Market Development: What Drives the Yield Spreads of M exican C ebures ?
Author(s) -
Espinosa Salvador
Publication year - 2013
Publication title -
latin american policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.195
H-Index - 4
eISSN - 2041-7373
pISSN - 2041-7365
DOI - 10.1111/lamp.12022
Subject(s) - bond , yield (engineering) , emerging markets , government bond , business , government (linguistics) , bond market , sample (material) , monetary economics , financial market , financial system , economics , financial economics , finance , linguistics , philosophy , materials science , chemistry , chromatography , metallurgy
A robust market for subnational bonds can provide emerging economies with additional tools to accelerate their economic growth. This article seeks to trigger a reflection on the factors that emerging nations such as M exico would need to take into account if the aim is to issue bond instruments that are attractive to investors. This study assesses the factors affecting the yield spread of a sample of M exican bonds known as C ebures . The analysis shows that only variables associated with the structure of the bond affect such yield spreads, not factors reflecting the financial strength of the issuing entity. Government policies aimed at modifying the implicit risk of this type of bonds may not be sufficient to alter bond buyer's risk perceptions.