IFC aims to help develop local capital markets:
- To create catalytic impact for future corporate bond issuances and facilitate financing through demonstration and signaling effect
To test and improve domestic processes for bond issuance and encourage changes in regulation (For example, cost of issuance or pension fund asset allocation.)
To provide access to a new breed of investors, particularly international investors
- To help local markets de-couple from more volatile global funding sources
For local investors, IFC issuances introduce a high-quality new asset class to the domestic market.
Why local currency bond issuances?
- Alternative to foreign currency borrowing, reducing various risks
Diversify sources of funding beyond banks and equity markets
- Support major trends that stem from economic and financial growth
- Issuers through; infrastructure development, privatization, securitization, and government decentralization create demand for bond issuances
- Investors through: the growth of insurance and social security create institutional investors that have an appetite for long-term assets such as bonds
Strengthen the financial sector:
- Transparency through public disclosure of business operations
- Competition with local banking sector through disinter-mediation