BACKGROUND

An active Local Currency Bond Market (LCBM) can play an important role in mitigating the impact of financial crises on the domestic economy, and facilitating absorption of capital flows (IMF, 2013). The use of domestic debt financing contributes to deep and liquid LCBMs, thus providing room for more domestic debt issuance and the establishment of a well-defined government securities yield curve – a key pricing benchmark for private securities and loans. This reduces pricing risk and increases liquidity in LCBMs. Furthermore, aligning debt instruments to the needs of the domestic and foreign investor base is key to the growth of LCBMs. Liquidity of the instruments is essential for both secondary market trading and primary market performance. This contributes to market deepening, which is critical in absorbing any shocks to the local financial markets and facilitates issuance of large volumes of bonds without necessarily affecting the pricing and overall borrowing costs. In support of the initiatives by governments to develop the domestic debt markets, and in recognition of the existing capacity gaps, MEFMI in collaboration with the IMF is scheduled to conduct a regional workshop on Domestic Debt Issuance and Trading.

OBJECTIVE

The objective of the course is to impart knowledge on domestic debt concepts, instruments, pricing, issuance methods, key players and considerations for developing local currency debt markets.

COURSE CONTENT

The course will cover the following topics:

1. Overview of the building blocks of LCBM and enabling environment for market development;

2. Definitions and key concepts in domestic debt market;

3. Key stakeholders and their role in the LCBM development;

4. Domestic debt issuance mechanisms;

5. Choice of issuance mechanism: debt management and market development considerations;

6. Valuation of domestic debt instruments;

7. Benchmark building program; 8. Mitigating refinancing risk; and

9. Secondary market liquidity/primary dealers.

TARGET GROUP
This course targets junior to mid-level officials responsible for domestic debt management and financial markets functions in ministries of finance, economic planning and development and central banks.