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: infrastructure development, privatization, securitization, and government decentralization create demand for bond issuances
- Investors: 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