World Bank Document...International lending and capital markets ... Volume of syndicated loans falls. Regional composition of borrowers varies. 10 PRIVATE SECTOR LEADS EAST ASIAN BORROWING

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Contents and summary

Continued low interest rates, improved annual volume was down 25%. The declinecredit ratings, and progress in debt restruc- was particularly pronounced for project

turings and privatization programs all con- finance, which plunged from $27.1 billion in

tributed to an increase in financial flows and 1995 to $16.5 billion in 1996. Dollar-

higher debt prices during the fourth quarter. denominated loans made up 88% of the mar-

Bonds maintained a vigorous pace, with ket. Stock markets fell marginally in the

$18.5 billion in issuances pushing total 1996 fourth quarter, but were up 7% for 1996.

issues to $73.0 billion. The quarter saw sig- Latin American markets, up 14%, posted the

nificant private sector issues from East Asia highest regional increase in 1996, with Asian

and Latin America. In contrast, issues from markets up 9%. Stock markets in Europe, the

Europe and Central Asia were dominated by Middle East, and Africa fell 5%. New equi-sovereign borrowers. Fixed-rate bonds made ties issuances took off, more than doubling

up 75% of the market. Secondary market in the fourth quarter, rising 34% for the year.

prices posted strong gains, aided by planned Of official flows multilateral commitments

swaps of Bradys and by debt restructuring rose 78% over the low level of the third quar-

agreements with commercial bank creditors. ter, but bilateral flows of official develop-

Loan commitment volume of $18.4 billion ment assistance appear set to decline (with

was just below the third quarter volume, but the important exception ofJapan).

International lending and capital markets

5 BOND VOLUMES HIT RECORD LEVELS IN 1996

5 LATIN AMERICAN AND CARIBBEAN COUNTRIES ISSU'E $10 BILLION

Argentina diversifies currency denomination. Brazilian banks become major players. Mexico

enters the lira market. Colombia and Trinidad arid Tobago issue debt.

6 FAST ASIAN BOND VOLUMES SURGE

Malaysia's oil and gas company taps market. Private sector dominates issuances from Indonesia,

China, and the Philippines. Thailand taps the yer sector. Korean borrowers enjoy lower rates.

6 PRIVATE SECTOR COMPANIES IN INDIA SPUR RECORD BOND LEVELS IN SOUTH ASIA

6 SOVEREIGN BORROWERS DOMINATE IN ElUROPE ANtD CENTRAL ASIA

The Russian Federation issues largest offering in region. Kazakstan issues benchmark bond. Util-

ity company in the Slovak Republic issues $200 million bond. Turkish, Czech, and Greek authori-

ties issue bonds.

7 ISSUANCES FROM OTHER REGIONS REMAIN LIMITED

Africa issues one bond. Lebanon is the only issuer from the Middle East and North Africa.

7 BOND MATURITIES ARE SHORT, RATES FIXED

Maturities average less than 10 vears. Fixed-rate bonds dominate.

8 SPREADS AT LAUNCH VARY WIDELY

8 SECONDARY MARKET PRICES RISE

Market posts strong gains in fourth quarter. Debt restructurings boost prices.

9 VOLUME FOR THE YEAR DECLINES AS ACTIVITY SHIFTS TO BOND MARKETS

Volume of syndicated loans falls. Regional composition of borrowers varies.

10 PRIVATE SECTOR LEADS EAST ASIAN BORROWING

Republic of Korea remains major borrower. Private sector borrowers dominate in Indonesia and

Thailand. Public sector borrowers dominate in China and Malaysia.

Financial Flows and the Developing Countries

X Contents and summary

10 LENDING TO LATIN AMERICA RISES

Mexico accounts for half of region's loans. Chile expands borrowing activity. Borrowinlg by other

countries is limited.

11 LENDING TO EUROPE AND CENTRAL ASIA RISES

Turkey, Hungary, the Czech Republic, and the Russian Federation are major players.

11 SOUTH ASIA BORROWS $1.3 BILLION

Indian oil and finance sectors borrow. Pakistan borrows to purchase oil.

11 LENDING TO AFRICA AND THE MIDDLE EAST REMAINS WEAK

South Africa and Ghana are the only borrowers in Sub-Saharan Africa. Lebanon and Oman are

the only borrowvers in the Middle East and North Africa.

12 TERMS FACING DEVELOPING COUNTRIES VARY WIDELY

Spreads are low in East Asia and the Pacific. Spreads are high, maturities short in Europe and

Central Asia Terms vary widely in Latin America. Borrowers from other regions face narrow

spreads. Most transactions are denominated in dollars.

13 PROJECT FINANCING DECLINES

Average size of loan grows and maturities lengthen. Spreads vary across and within regions. Infra-

structure financing continues to dominate the market. East Asia claims the bulk of transactions.

Financing to Europe and Central Asia increases. Borrowing in other regions remains limited.

5 Mza.rtetrditwrnr____

15 EGYPT IS ASSIGNED A BA2 RATING BY MOODY'S

15 RUSSIA AND KAZAKSTAN ARE ASSIGNED CREDIF RATINGS BY MOODY'S AND S&P

15 HUNGARY RECEIVES INVESTMENT-GRADE RATING

15 OTTLOOoK FOR INDIA IMPROVES

15 CREDIT RATINGS ARE DOWNGRADED IN PAKISTAN AND TURKEY

Equity portfolio and foreign direct investment

Xb r D i :)c E _rk-- -

16 EMERGING STOCK MIARKETS ARE UP FOR 1996

Latin American markets gain. Performance varies in East Asia. Markets decline in South Asia.

South Africa drags down index for Europe, the Middle East, and Africa.

\ i d Nvv FC e; i t-E S

17 NEW EQUtIY ISSUES RISE SHARPLY

Fourth quarter activity surges. Equities are up for the year. Indonesian bank is largest issuer in

East Asia. Indian bank is largest issuer in South Asia. Venezuela leads issues in Latin America.

Russian gas monopoly is the major issue from Europe and Central Asia. Few offerings are issued

in the Middle East and North Africa.

19 NEW FUNDS ARE CREATED FOR AFRICAN, EUROPEAN, AND ASIAN MARKETS

Africa Investment Fund is launched. New funds are launched in Europe and Central Asia.

Prudential will launch fund ainied at East Asia.

DUit,re&-n cssrect rnestrnent avid shFiza

20 FOREIGN DIRECT INVESTMENT TO LATIN AMERICA SURGES

20 COMPETITION TO INVEST IN CHINA INTENSIFIES

February 1997 X

Contents and Summary

20 SOUTH AFRICAN INVESTORS MOVE NORTH

21 REPUBLIC OF KOREA INVESTS IN EUROPE

21 ASIA CONTINUES TO ATTRACT FOREIGN INVESTORS

21 PRIVATIZATIONS CONTINUE IN FOURTH QUARTER

Official flows

22? MulvlUatera'~ f<S9UTw

22 MULTILATERAL COMMITMENTS RISE 78%

22 WORLD BANK COMMITMENTS ARE UP $2.4 BILLION

23 OTHER MULTILATERAL AGENCIES SHOW STRONG INCREASES

11i) !Mlat-rai 1D-A and zxpot.>9 zv!e n3s

23 ODA TO DECLINE IN MAJOR INDUSTRIAL COUNTRIES

24 EXPORT-IMPORT BANK OF JAPAN LENDS TO TURKWENISTAN, INDONESIA

24 US EXPORT-IMiPORT BANK LENDS TO ANGOLA, CIIINA

Debt relief update

24 NIGER AND MOZAMBIQUE RECEIVE FLOW RESCHEDULINGS FROM PARIS CLUB

24 BENIN CONCLUDES STOCK DEAL WITH PARIS CLUB

24 FYR MACEDONIA REACHES AGREEMENT WIATH COMMERCIAL BANKS

25 PERU RESTRUCTURES $8 BILLION IN COMMERCIAL BANK DEBT

25 C 6 TE D'IVOIRE RESTRUCTURES $7.2 BILLION IN COMMERCIAL BANK DEBT

25 SENEGAL RESTRUCTURES $75 MILLION IN COMMERCIAL BANK DEBT

Financial brief: Determinants of Japanese FDI

Statistical appendix28 New bond issues 29 New loan issues D 30 Neiv equity issues r 32 Bank and trade-related

nonbank claims n 33 Commercial bank claims on developing countries 34 Commercial bank

claims on developing countries, by country of origin E 38 Maturities of bank claims on developing

countries 2 39 Funds raised on international capital markets L 40 Secondary market debt (bid)

prices n 41 Emerging stock markets a' 42 Country groups

ANote: Tables on external debt, aggregate long-term resource flows, and foreign direct investment flows arepublished only as data are updated.

Korea is no longer included in the regional aggregates in both the text tables and the statistical annex,because it is now classified as a high-income country. This change results in significant differences in the totals forall developing countries and East Asia and the Pacific from trose reported in previous editions. WTe will continue todiscuss Korea's financial transactions in the text.

j Financial Flows and the Developing Countries

*r~~ International lending and capital markets

Bonds issuances in the fourth quarter coming from the

private sector. Banks were the major players.

Bond volumes hit record levels in 1996 Brazil returned to the dollar sector for the first

Developing countries borrowed $18.5 billion in time since 1982 with a 5-year global issue of $750

international bond markets in the fourth quarter, million, placed at a spread of 265 basis points over

bringing the annual volume of bond issuances to US Treasury securities. One of the government's

$73 billion, up 53% over 1995. Volume for the aims was to establish a sovereign benchmark for

year was the highest ever recorded by developing sector issuers from Brazil. Petroleo Brasilero, the IPt e&tP;I U eUnOcountries (table 3). Issuances from East Asia and largest public sector issuer, enjoyed enthusiastic D0npd ksues bvLatin America represented 83% of total volume in investor demand, enabling it to secure more

1996. Low US long-term bondyields helped main- funds than originally planned. European - r

tain the attractiveness of developing country debt. investors, although they usually prefer somewhat C2 5X .

shorter maturities on bonds issued by developing . i '

Latin American and Caribbean countries, purchased the company's 8- and 10-

countries issue $10 billion year issuances. .t,' qucrcif; utiARGENTINA DIVERSIFIES CURRENCY DENOMINA- MEXICO ENTERS THE LIRA MNRKET. The gov- e Or

TIONS. Argentina borrowed $4.7 billion during the ernment of Mexico made its debut in the lira mar-

fourth quarter, half of the regional total for Latin ket with a 5-year 500-billion Italian lira ($329

America and the Caribbean. In October a DM 500 million) issuance. The issue had wide appeal to

million ($324 million) 30-year deal was launched institutional investors because of its floating rate

at 497 basis points over German securities. That structure. The rate on the note was about 75 basis

issuance represents the longest yield curve for points below the rate on Argentina's lira bond.

developing countries in the deutsche mark sector. Petroleos Mexicanos issued $300 million in debt

In December Argentina raised another DM 1 bil- for three years at a very competitive spread of 175

lion, pricing the 8-year issue at 295 basis points basis points. Demand from Swiss retail investors

over Bunds (German government obligations). was substantial.

Recognizing the above-par performance of ther rBond issues by type of borrowercountry's outstanding bonds, Benelurx, German,

. . . US$ millions 1~~~~~~~~~~996 1996and Swiss retail investors expressed strong interest !U mons 995 996 Q3 Q4

in both transactions. Argentina also issued close to All deveioP ng countries 47,749 72,977 18.657 18.546

$1 billion in yen-denominated securities. Japan's Private 15473 21 614 3,928 5469

low domestic interest rates (ranging from 0.5% on Sub-Sahararn Afr ca 100 250 0 0East Asia and the Par/fic 6531 6 7,420 1,496 2,187

short-term instruments to 2.75% on 10-year instru- Soath a 520 672 2 222

ments) encouraged small and local investors, such Europe and Central Asia 541 546 46 159

as regional banks, credit cooperatives, and foun- Lat r America 7,746 12,567 2,136 2,80Macddae East and North Africa | 50 160 0 00

dations, to lock in the high coupons offered by Sovereign i24253 4 082 3215 8693

Latin American borrowers. Discount prices cou- Sub-Saharan Afr ca 496 782 331 300

pled with high coupons helped Argentina raise EastAsa and the Pacfic 569 3,459 1,760 316South Asia 0 50 0 0

another $1 billion in Italy in tliree transactions Europeand CentralAsia 10204 8,919 978 2,602

with maturities ranging from 5 to 10 vears. Latin America 12,105 27,345 9,7 9 5,474M dc e East and North Africa 879 428 428 0

Argentina also issued a Sfr 200 million ($157 mil-Other pub.1c 1 8 023 10,28 .5 4 4 384

lion) bond in the Swiss market, where retail Sub-Saharan Africa i 396 140 0 0

investors were attracted bv interest rates twice as East As;a and the Pac fic 3 083 4 042 999 2484South Asia 262 220 0 0

high as those available domestically. Europe and Central Asia 50 80 0 80

BRAZILIAN BANKS BECOME MAJOR PLAYERS. Latin America 2 731 5,449 465 1,720Middle East and North Africa 50 250 50 100

Borrowings from Brazil accounted for about one- Note Fourth quarter figures are as of December 23, 1996.

third of the regional total, with about 60% of Source. ELiromoney Bordware and Wlord Bank.

Febrrary 1997 I


COLOMBIA AND TRINIDAD AND TOBAGO ISSUE with a two-tranche 30 billion yen ($266 million)

DEBT. Colombia came out with a DM 275 million deal. Maturities on the two tranches were 5 and 10

($180.5 million) issue targeted at institutional years. Private sector issuers accounted for all other

investors. Trinidad and Tobago issued $150 mil- bond issuances, most of which were in the US

lion in 10-year bonds, priced at 175 basis points dollar sector.

over US Treasuries of comparable maturity. KOREAN BORROWERS ENJOY LOW1ER RATES.

The Cho Hong Bank and the Korean Develop-

3a0.id 1 SS 141in' i 911 East Asian bond volumes surge ment Bank were the first Korean borrowers to tap

East Asian countries borrowed $5 billion in the the market in the fourth quarter, issuing Ffr 1.5

bond market in the fourth quarter, the highest billion ($291 million) in 6-year bonds, priced at

,eccn,di recodc quarterly level in 1996. Major players included only 33 basis points over comparable French gov-

levels in t½ Malaysia ($2 billion), Indonesia ($0.9 billion), ernment securities. Korea's cost of borrowing inand Thailand ($0.9 billion). Borrowers in the international bond markets has fallen as demand

flu r 4j CluS^<Xre - Republic of Korea (not included in the regional from European institutional investors has

total) issued $4.5 billion. increased. Some investors (especially from the

MALXYSLX'S OIL AND GAS COMPANY TAPS M1AR- US) still seek a substantial premium, however.

RET. Malaysia's public sector oil and gas company,

Petroliam Nasional Bhd, raised $1.9 billion in three Private sector companies in Indiatranches of 5, 10, and 30 years, with demand from spur record bond levels in South Asiainvestors allowing the company to increase the Bond issuance in South Asia reached record lev-

amounts borrowed at the longer maturities. The -ls in the fourth quarter, spurred by issuances by

average spread was about 60 basis points, with 30- private sector companies in India. Indian issues

year funds arranged at 84 basis points over US Trea- averaged about $45 million, with an average matu-

suries, only twice the rate charged for 5-year funds. rity of 7 years. The first deal of the quarter, a $50

PRIVATE SECTOR DOMINATES ISSUANCES FROM million issuance by the Great Eastern Shipping

INDONESIA, CHINA, AND THE PHILIPPINES. Most of Co. Ltd., was purchased largely by Asian investors,

the issuances from Indonesia came from the private who took up 70% of the issue; the remaining

sector, with issuances from the finailce and bankinig bonds were purchased by Middle Eastern and

sector particularly strong. All Indonesian issues E]uropean investors. The company carried the

were floating rate instruments, except a $100 mil- highest rating from the domestic credit rating

lion private finance company issuance with a 5-year agency, perceived by international investors as the

maturity and a spread of 290 basis points. The only equivalent of a Baa3 (lowest investment grade).

public sector issue came from PT Bank Degang Standard & Poor's decision to upgrade the out-

Negara, which issued 7-year, floating rate notes. look for India from stable to positive helped spur

China's largest issue for the quarter was a $200 increased demand for Indian issues (see section

million convcrtible bond issue by Zhenhai Refin- on creditworthiness). The narrowing of sec-

ing and Chemical Co. Ltd., one of the few con- ondary market spreads on outstanding bonds also

vertibles to be issued in the fourth quarter outside improved market conditions for launching issues.

of the Republic of Korea. Guangdong Overseas

Chinese Trust and Investment Corp. raised $50 Sovereign borrowers dominatemillion through private placements of floating in Europe and Central Asiarate notes in the euromarket. S,overeigns from six European and Central Asian

Bond issuance from the Philippines came to countries issued bonds worth $2.6 billion in the

about $500 million in the fourth quarter, all from fmurth quarter, hringing the total fourth quarter

private sector issuers. borrowings in the region to $2.8 billion. The Rus-

THAiLMND TAPS THE YEN SECTOR. Thailand's sian Federation and the Republic of Kazakstan

government arranged financing in the yen sector made long-awaited debut issues, and a second


m International lending and capital markets

issue came from Estonia, which first entered the Greece brought to market a jumbo DM I bil-

bond market last summer. lion ($656.4 million) deal with a maturity of 10

THE RUSSIAN FEDERATION ISSUES LARGEST years, launched at an 80 basis point spread over

OFFERING IN REGION. The Russian Federation's $1 Bunds.

billion issue with a 5-year maturity and a spread of

345 basis points over US Treasuries was the largest Issuances from other regions

issuance from the region. Oversubscription remain limited

enabled the government to increase the amount AFRICA ISSUES ONE BOND. South Africa issued o.st of theoffered. Investments were made by emerging mar- a 10-year Yankee bond with a spread at launch of - sket and institutional bond fund investors in the 195 basis points.

US (44%), Asia (30%), and Europe (26%). The LEBANON IS THE ONLY ISSUER FROM THE MID- Dy developingissue's success is expected to pave the way for DLE EAST AND NORTH AFRICA. Lebanon's Banque X icS ho theother bond isstues from local authorities and blue de la Mediterranee issued bonds worth $100 mil-

chip companies in Russia. lion, placed largely with retail investors. Given the M lf

EAZAKSTAN ISSUES BENCHMARK BOND. Kazak- yields and maturities of earlier transactions by had meturitiesstan brought a $200 million issue with a 3-year Lebanon's banking sector, the issue offered rela- less thanmaturity to market in the fourth quarter. The tively good value to investors. Part of a second

launch spread was 350 basis points, slighdy higher $100 million issue by a private bank was placed & Vt orsthan the initial spread on the Russian bond, but through US rule 144a, which facilitates private

lower than the 353 basis point secondary market placement of foreign bonds in the US market. An

spread on the Russia issue. One objective of the exceptionally large proportion of the issue (three-

issue was to establish a benchmark for corporate fourths) was placed with blue chip institutional

issuers from the country. European and lTS investors.

investors purchased 40% each of the issue, with

20% going to Asian investors. A large share of the Bond maturities are short, rates fixedissue was purchased by specialist emerging market MATURITIES ATVRAGE LESS THAN 10 YEARS. Most

funds. of the bonds issued by developing countries in the

UTILITY COMPANY IN THE SLOvAK REPUBLIC fourth quarter had maturities of less than 10 years

ISSUES $200 MILLION BOND. The state-owned (figure 1). About 42% carried bullet maturities of

energy utility company in the Slovak Republic less than 5 years. Issues with longer maturities

issued a 10-year government-guaranteed bond for came from Brazil (15 years) and Argentina and

$200 million. The issue, priced at 115 basis points Malaysia (30 years). More than 60% of the bonds

above comparable US securities, was purchased by from Latin America and 45% of the bonds from

institutional investors in the US (60%). Europe EastAsiaexceeded5years,whilemostoftheissues

(25%), and Asia (15%) and was perceived as a from Europe and Central Asia had maturities of 1

good proxy for sovereign debt, which helped to 5 years.

boost investor demand. FIXED-RATE BONDS DOMINATE. About 85% of

TURKISH. CZECH, AND GREEK AUTHORITIES the bonds issued in the fourth quarter had fixed

ISSUE BONDS. Turkish authorities raised close to interest rates (figure 2), which are generally pre-

$500 million in the fourth quarter in the deutsche ferredt by retail investors. Convertible issues

mark sector, where they have good standing with accounted for less than 4% of issuances, with the

retail investors. only convertible transactions coming from East

The City of Ostrava, in the Czech Republic, Asia and India. The majority of the floating rate

raised DM 75 million ($48.8 million) with a float- issues came from a small number of countries.

ing rate note. Ostrava is not as well known as Issuers from Latin America relied heavily on

Prague (a more frequent market player), but car- fixed-rate securities to attract new retail investors,

ries the same creditworthiness rating. with only 6% of total volume issued in the form of

February 1997

International lending and capital markets 0

floating rate notes (by Colombia and Mexico). spread for sovereign borrowers in Europe and

Latin American countries also achieved a more Central Asia averaged 240 basis points, primarily

diversified investor base than many other regions, r eflecting the sovereign's cost of borrowing. Bor-

with the highest share of non-dollar-denominated r owers from Kazakstan, Russia, and Turkey faced

bonds of any region. Europe and Central Asia relatively high spreads.

accounted for the highest regional share of For Latin American countries the average

deutsche mark bonds, largely as a result of spread in the primary market was 345 basis points.

~->a3 -3V;e^.f,ge issuances by Greece and Turkey, which are well Among the single sovereign transactions

r~e4

3f 5n 'ci* established in that market. East and South Asian Argentina faced the highest spread (497 basis

borrowers preferred the lUS dollar market, points over deutsche mark risk-free securities) for

' 0 t f-3VefU3t i uu although Koreans tapped the French and Swiss 30-year funds, and Trinidad and Tobago faced the

.rc.Sin esif>/33gt franc markets with small issues. lowest spread (175 basis points for 10-year financ-ing). Brazil faced a spread of 265 basis points for

2rj,._< 4SSf :,r. V'e7g'^% Spreads at launch vary widely rv-ear funds in the US dollar sector, while for

- S -s,er Based on the information available on launch Mexico the spread was 318 basis points for 8-year

spreads, the average cost of borrowing by devel- funds in the deutsche mark sector. The average

oping countries ranged from 55 to 375 basis spread for the two Lebanese transactions was 300

points over the risk-free rate, with an average rate basis points.

of 273 basis points. Malaysia, Greece, and the Slo-

vak Republic were at the lower end of the spec- Secondary market prices risetrum, and most Latin American countries were at MARKET POSTS STRONG GAINS IN FOURTH QUAR-

the upper end. The sovereign issues by South TER. The secondary debt market posted strong

Africa paid about 1 percentage point less than the gains in the fourth quarter (figure 5), with the

average for all developing countries. Among the prices of virtually all Asian and Latin American

private sector borrowers from East Asia, the high- bonds rising. Low interest rates in the major

est spread was for Indonesia (290 basis points), fol- industrial countries-rates in Germany are at a

lowed by Malaysia (190 basis points) and Thailand post-War low, rates in Japan are the lowest they

(175 basis points). Public sector borrowers in have been this century, and USrates are low-and

Malaysia paid a spread of 55 basis points. The increased creditworthiness of Latin American and

Bond issues from developing 2 Bond issues from developingcountries, by maturity countries, by typeUS$ n-ilions USt m',Tiorns

73.0 Over IS years 73.0 Floating EI l-IS years E Convertible f6-10 years H - Fixed rate 5

1-5 years

18.7 18.5 ~~~~ ~~~~~~18.7 18.5

1996 1996Q3 1996Q4 !996 1996Q3 ;996Q4

Source Euromronev Bondware and World Bank. So rce: Euromoney Bondware and World Bank.

Financial Flows and the Developing Counrtnes


Eastern European countries accounted for the Commercial bank loansstrength of bond prices. Currency

DEBT RESTRUCTURINGS BOOST PRICES. The Volume for the year declines composition of bondrestructuring of sovereign foreign debt through as activity shifts to bond markets issues, 1 996Q4buybacks, debt-for-debt exchanges, and paydown VOLUME OF SYNDICATED LOANS FALLS. Partici- East and South Asia

of Brady bonds also increased demand. Mexico pation by developing countries in international ($5 b lion)

and the Philippines, which restructured or loan syndications reached $18.4 billion in the Othe%

exchanged Bradvs in 1996, and Venezuela, which fourth quarter, about the level of the second and

plans to restructure its Bradys, enjoyed higher third quarters (table 2). The $77.5 billion bor-

bond prices in the fourth quarter. Veneziuelan rowed in 1996 represents a $25.4 billion drop US$

policymakers met with Moody's and Standard & from 1995, as more government borrowers turned 83%

Poor's to seek a credit rating upgrade, something to the bond market. The share of sovereign bor- Latin America

some analysts believe is long overdue. rowings for the vear sank to 5%, and the share of ($10 billon)- ~~~~~~~~~~~~~~~~~9 IOther

Argentina and Brazil are planning to reduce other public sector borrowers fell from 43% in Oter

their Brady bond exposure. Argentina is expected 1995 to 35% in 1996. The private sector continued 130/

to undertake a debt-for-debt exchange. in which its strong presence in the syndication market, DM USBradys (which are backed by US Treasury bonds) accounting for 60% of volume for the year and 16%

will be swapped for higher-yielding uncollateral- 58% of the volume in the fourth quarter.

ized bonds. REGIONAL COMPOSITION OF BORRONWERS VARIES. 901O

In November Peru signed the accord for its Private sector activitv accounted for the majority of Europe and Central Asia1 ~~~~~~~~~~~~($2 B b Ilicr)

Bradv debt rescheduling agreement (see section on syndications to East Asia and Europe and Central

commercial bank debt restructuring). The price of Asia in the fourth quarter, with Indonesia, Thai-

Peruvian debt in the secondary market rose by more land, Hungary, and Turkey accounting for the Other

thani 50% in 1996 in an ticipationi of this agreement. largest volulmies. Amoing public sector borrower-s 5 2%

In contrast, the price of Senegal's debt China accounted for the largest share of loans to ____

Soa'ce. Euromoney Bondware andremained unchanged despite the recent agree- East Asia. In contrast, the distribution of syndica- Word Barn.

ment to restructure its $75 million in debt tions was more even in Latin America and South

through a cash buyback and issuance of a long- Asia.

terrn payment collateralized by US Treasury bills.

Russian eurobond Vnesh paper rose with the -Ic,:] Secondary market price index, April 1993-expectation of a sovereign rating announcement December 1996

Apnl 1990= 100for the Russian Federation by the credit rating _I

agencies (see section on market creditworthiness). 220 ----- ----- --- --- --- ----- ----------- ----- - ---- ---- ----

-3Rr Sectoral composition of 200 - - r__ - - --------------- _-.-- - -developing-country bond issues, -'1996Q4

180 --- ;g-- 0-t- j. ~~~ ~~~ All debt 7Energy/te1econm/ 1r

cotities 4% / 7

Government - - flnonce 28%

_ _ _ _ __ -~ 100

Note: "Other' includes utiltes, agricLtJre construcion, transport and cother services.Source- Euromcney Bondware and World Bank. Source: Word Bank.

Februamy 1997R%V.^


4 Loan issus by type f borrower ___ _ ____ (lications for China were for public sector compa-

US$ millions '994 995 1996 Q4 996 Q1996 Q996 1996 ries providing financing and investment services.

A7,5l7 developngcounsres 25 87 5C 4 China Southern Airlines arranged two loans toAll eveopig cunt es72,780 l02,9l F 77,547 41,797 2 523 8,870 18,750 18,404

PrAicte 1 32,110 51,075 46,844 22,181 12,170 13,010 10,987 10,677 finance aircraft purchases, and there were a fewSub-Saharan Africa 1,022 2,606 3,788 267 8 5 2,144 446 384 transactions to private sector shipping and trans-

East Asia and the Pacific 20,685 28.447 26,843 12,134 8,959 7,060 7,445 3,379South Asia ,857 2.400 1/697 300 643 171 304 580 portatoncompanies.Theaveragesizeofsyndica-

Europe and Central Asia E645 5,344 5,904 3,442 816 1 25 1.089 2,873 tions for China was about $60 million.Latin Amer ca 6,434 11,621 8,135 5,987 938 2,255 1[669 3,274 The largest syndication for Malaysia was for

Middle East and Noth Afrca 468 657 477 50 0 255 35 187Sovereign /0,604 7,284 3,548 ,600 ,.23 678 95 831 financing the purchase of aircraft by the national

Sovereign 10,604 7,284 3,548 ,600 ,123 678 9 15 831Sub-Saharan Arica 28 41 1 415 56 40 0 375 0 carrier. The only deal by the state authorities was a

East Asia and the Pacific 4,074 ,727 790 88 98 542 100 50 $50 million loan tojohor Corp., established by theSouth Asia 283 361 701 200 375 0 182 143

Europe and Central Asia 2,585 1,666 541 314 60 136 08 236 parlamenttopromote economic development.Latin America i 585 2,9 14 352 737 350 0 0 2

>3 dole East and North Africa / 3,048 205 750 205 200 0 150 400r I,~~~~~~~~~~~ending to Latin America rises

Otherpublic 30,066 44,552 27, 55 8,016 8,230 5,182 6,848 6,896 ac.iloSub-Saharan Africa 3 1 1 2,649 1,264 940 440 185 349 290 Latm American borrowmg reached $6.8 bllion m

EastAsia and the Pac ic 14,568 18,077 7,726 10,446 2,479 1,74 1,767 1,739 the fourth quarter, the highest quarterly level inSouth Asia 2,411/ 3,339 3,335 634 968 1,082 720 565

Europe and Central Asia 6,692 6,759 6,973 2,215 2,845 994 2.374 760 1996, as loan commitments to both the privateLat n America 4,838 5,660 7,186 2,802 937 1,079 627 3,542 and public sectors grew.

M ddle East and North Africa L 1,246 8,067 671 979 56 1 100 .0 0 MEXICO ACCOUNTS FOR HA.F OF REGION'S

.Niote: Fourth cuarter figures are as of December 7, 1996.Sourca: Eiromoney Loanware and World Bank. LOANS. Mexico borrowed $3.4 billion in the fourth

quarter, accounting for half of all syndications to

Private sector leads the region. The state oil and gas company,

East Asian borrowing PEMEX, was the only public sector borrower

REPUBLIC OF KOREA REMAINSMAJOR BORROWER, through refinancings and trade- and receivable-

Private sector companies in the construction, elec- backed financings. The bulk of private sector

tronics, leasing and financing, and shipping indus- loans was raised by commercial banks.

tries were the primary borrowers in the Republic CHILE EXPANDS BORRONING ACTIVITY. Syndica-

of Korea. The largest deals were a 1 0-year $300 mil- tions by Chilean borrowers, which totaled $1.1 bil-

lion syndication for Korean Airlines Co. Ltd. and lion in the fourth quarter, were about equally

a 15-year $225 million term loan for Hyundai Mer- distributed between the public mining sector and

chant Marine Co. Ltd. The loans will fund the private financial services and food processing

delivery of aircraft and vessels. Both deals were companies. Several borrowers tapped the inter-

heavily secured. Other deals in Korea averaged national capital markets for the first time in

about $40 million. In a few cases, such as the $40 decades.

million loan to Hyundai to finance construction of BORROWING BY OTHER COUNTRIES IS LIMITED.

an automobile factory in Turkey, the loan market Borrowers in Colombia came mainly from the pri-

was used to finance foreign direct investment vate sector. One borrower had to turn to private

(Korea being a significant provider of FDI). banks for refinancing after the US Export-Import

PRIVATE SECTOR BORROW,ERS DOMINATE IN Bank withdrew cover for the country because of

INDONESIA AND THAILA-D. Almost all of the $1.7 political tensions. The largest syndication, a $400

billion raised by Indonesian borrowers went to the m:illion loan with a 5-year maturity, went to Colom-

private sector, with syndications often used as refi- bia's leading brewer. The rest of the region's

nancing facilities. Private sector companies in financing (20%) went to Argentina, Bolivia,

Thailand borrowed about $1 billion, with most of Brazil, Panama, and Belize, where the Develop-

the deals oversubscribed. ment Finance Corporation raised $2 million to

PUBLIC SECTOR BORROWERS DOMINATE IN firance small and medium-size enterprises in the

CHINA AND MALAYSIA. In contrast, most of the syn- country.

FinancialFlows and the Developing Countries

* International lending and capital markets

Lending to Europe $175 million for general funding, and Slovenia

and Central Asia rises and Slovakia each borrowed less than $100

TURKEY, HUNGARY, THE CZECH REPUBLIC, AND million.

TH E RuSSIAN FEDERATION ARE MAJOR PLAYE RS. Syn-

dications for Europe and Central Asia reached South Asia borrows $1.3 billion

$3.9 billion in the fourth quarter, up from $3.6 bil- INDIAN OIL AND FINANCE SECTORS BORROW.

lion in the third quarter. The largest loan to India was a $200 million trade

Turkey borrowed $1.3 billion, with private sec- financing facility syndicated for the Indian Oil Syndicc clanstor commercial banks providing trade financing Corp. Ltd., the country's largest commercial com-0 Fo~~~~~~~r Ecro' e andfor the largest players. pany and sole importer of crude oil. The cotn- '

Hungary borrowed $0.9 billion, with the try's principal industrial finance institution, Central Asialargest syndications going to the telecommunica- IDBI, borrowed $150 million for 7 years. Over- reachedtions sector. The $100 million syndication to the subscription bv syndicate members allowed for a

oil and gas corporation, Magyar Olaj-es Gazipari 50% expansion over the original size of the deal. >3 9 biUiRon,Rt (MOL), was the only loan to the public sector Most other deals in India were for private sector up $3.6 billionin Hungary. borrowers, with an average loan size of about $30

The Czech Republic borrowed $0.6 billion in million. fom the thirdthe fourth quarter, 70% of which went to the pri- PA.ISTAN BORROWS TO PURCHASE OIL. Pakistan auartervate sector. accounted for 30% of the loan volume in the

Of the seven deals totaling $0.4 billion syndi- region. Funds were raised primarily to finance

cated for the Russian Federation, four were for crude oil purchases by the Ministry of Petroleum

first time borrowers. Activity was restricted to the and Natural Resources ($100 million) and by Pak-

banking and oil sectors. istan State Oil Co. Ltd ($105 million). Other

Three countries in the region (Croatia, Slove- loans, primarily from private companies, averaged

nia, and Turkey) accounted for most of the gov- about $60 million.

ernment borrowing. The 2-year DM 200 million

($131.4 million) syndication for Croatia repre- Lending to Africa andsents the first commercial bank loan to that the Middle East remains weak

country. The National Bank of Romania raised SOUTH AFRICA AND GHANA ARE THE ONLYBOR-

ROWERS IN SuB-SAHAR,N AFRICA. South Africa

-Et)r. - | Syndicated loans to developing borrowed $650 million in the fourth quarter. Pri-countries, by maturity vate banks borrowed $210 million, and a mining

U5$ muiions company received a favorable response in the

77.5 Over IO years Euromarket in its first syndicated borrowing. A

6-10 years E state-owned public utility company arranged

2-5 years EL financing for building gas fields, while other com-

0-1 years EM panies borrowed for working capital. The only

other borrower in the region was Ghana, where a

hospital group borrowed STG 14.5 million ($24

million).

LEBANON AND OMAN ARE THE ONLY BORROW-

18_7 18.4 ERS IN THE MIDDLE EAST AND NORTH AFRICA.

Lebanon benefited from a project financing

transaction (see below), and Oman refinanced a

5-year-old loan with a $400 million 7-year syndi-

1996 1 996Q3 I 996Q4 cation. The funds will be used for oil and petro-

Source. Euromoney Bondware and Word Bank. chemical projects.

febmary 1997


Terms facing developing basis points (the highest of any region). The high

countries vary widely average cost reflected the very high cost of bor-

The margin over LIBOR paid by developing coun- rowing by the Russian Federation, which faced

tries ranged from 29 basis points (Slovenia) to 510 spreads of more than 500 basis points for 2-year

basis points (the Russian Federation) in the loans. Low-cost borrowers included Slovenia (29

fourth quarter, with an average margin of about basis points, with an average maturity of 7 years)

95 basis points. and the Czech Republic (36 basis points, with an

SPREADS ARE LOW IN EAST ASIA AND THE average maturity of 3 years). Spreads were 175

PACIFIC. In East Asia the average spread was about basis points over the risk-free rate, with an aver-

80 basis points and the average maturity about 4.5 age maturity of 2 years in Croatia; 175 basis

years in the fourth quarter (figure 7). Spreads points, with an average maturity of 3 years in

were highest in Papua New Guinea (165 basis Romania; close to 100 basis points, with an aver-

points, with an average maturity of 7 years) and age maturity of 2 years in Turkey; and below 100

Indonesia (160 basis points, with an average matu- basis points, wvith an average maturity of 6.5 years

rity of 4.5 years). Spreads were above average in in Hungary.

Vietnam (135 basis points, with an average matu- TERMS VARYWIDELYIN LATIN AMERIcA. Spreads

rity of 7 years) and the Philippines (125 basis facing Latin American borrowers ranged from 25

points, with an average maturity of 5 years). The tiasis points for a 2-year loan to Panama to 300

solid market standing of Malaysia kept spreads basis points for a 6-month loan to Bolivia. The

there low (about 55 basis points, with average average maturity for the region was 3.5 years, with

maturity of about 4.5 years). China and Thailand longer maturities in Colombia (5.5 years),

paid about 100 basis points over LIBOR on matu- Argentina (5 years), and Chile (4.75 years).

rities that were slightly lower than the average for Spreads averaged 240 basis points in Argentina,

the region. 163 basis points in Colombian, and 40 basis points

SPREADS ARE HIGH, MIATURITIES SHORT IN in Chile. The average spread in Mexico was 72

EUROPE AND CENTRAL AsiA. Spreads on loans to basis points, with an average maturity of 18

Europe and Central Asia averaged nearly 150 months.

BORROWERS FROM OTHER REGIONS FACE NAR-

ROW SPREADS. Low spreads in other regions- - ; - Average maturity and spread of international loan reduced the average cost of borrowing by devel-

syndications for developing countries, 1 996Q4 oping countries. South Africa, India, and OmanApri! 990=100

were able to borrow at margins of about 50 basisAverage spread points. Maturities averaged 3.5 vears in South(basis points)150 - - -- -- ---- - r--- -- - Africa, 5 years in India, and 7 years in Oman. The

f:T Europe endCentre! Asi spread on loans to Pakistan of 100 basis points was

20 -jst above the average for developing countries,. . g ~~~~Looin Amenca

D otin Arnericc but the average maturity of about 2 years was less90.I All developing countries than half the average.

Eaost Asiac.kL0Xfl . MOST TRANSACTIONS ARE DENOMINATED INend Pacifi Of: South Asia

60 - ------ ---- ---- DOT.LARS. Dollar-denominated loans accountedS boon for 86% of developing countries' borrowings in

. E Sub-Saharsn ~~~~~~~Midd!e Lost end iS:30 --- -- -- - -Africo---- --- - -Nsrh Afnca the syndicated loan market (figure 8). Nondollar

borrowings came from East Asia and Europe and

0 t Central Asia. One loan to China was made in! 2 3 4 5 6 7 Hong Kong dollars, a handful of issues to Indone-

All develaoping cauntniesAll_ __ developing countriesSia and Malaysia were arranged in local curren-

Source: Euromoney Loarware and World Bank. cies, two loans to Thailand were made in yen and

F c

Fsnanca.l Flaws and the Developing Couhntries

* International lending and capital markets

Swiss francs, and somne deutsche mark syndica- a whole but continiued to account for almost half

tions went to Europe and Central Asia. of project finance volume in 1996 (see table 3).

Led by borrowings from East and South Asian

Project financing declines countries, the power sector accounted for over

The international loan market provided some 50% of infrastructure financing in the fourth

$3.3 billion for project financing in the fourth quarter, with telecommunications, construction,

quarter, down from $5.3 billion in the third quar- and water and sewage sectors also accounting for

ter (table 3). Recent quarterly variations are of a significant volume of loans. Countries receiv-

limited importance, however, because they are ing financing for infrastructure transactions in

greatly affected by the timing of a handful of large the fourth quarter included several Asian coun-

deals, and the fourth quarter total may reflect tries, and Colombia, Lebanon, Hungary, and

some delayed reporting of transactions. For the Turkey.

year as a whole project financing declined by EAST ASIA CLAIMS THE BULK OF TRANISACTIONS.

about a third compared with 1995, reflecting a East Asian countries accounted for 57% of the

shift away from syndicated lending toward financ- project finance transactions in the fourth quarter

ing through bond markets. and 69% of transactions for the year as a whole,

AVERAGE SIZE OF LOAN GROWS AND M1ATURITIES up fromjust over 50% in 1995. The decline in pro-

LENGTHEN. Although the number of transactions ject financing volume in the fourth quarter

fell sharply in the fourth quarter, the average size resulted largely from the relatively small number

($102 million) and maturity (6.8 years) of project

financing transactions rose to their highest quar- Project finance by region and sector

terlylevelsin 1996 (table 4).Countries in EastAsia US$ no i0ons 1996 1996

and South Asia averaged the longest maturities (7 - 19796 Q3 Q4

Years), with a range from 2 to 10 years. RegionAl developngcountries 16,555 5,338 3,304

SPREADS VARY ACROSS AND WVITHIN REGIONS. Sub-Sanaran Afr ca 200 75 40

The average spread for developing countries was East Asia and the Pacfic 11,484 3,944 i.878South Asia 1,509 525 60

148 basis points. The highest cost borrowers in Europe and Central Asia 1,506 249 798

East Asia, Indonesia and Papua New Guinea, Latin Anerica and Caribbean 1,514 500 340Modde East and North Africe 342 45 187

faced spreads of around 160 basis points. Rates in Sector

Hungary (250 basis points) and Turkey (181 basis Power 4,597 1,788 783

points) were among the highest spreads paid by Teecommunications .662 673 31Transpor-tation 427 270 0

developing countries. Argentina paid 140 basis Other nfrastructure 1,307 I80 601

points for 5-year funds. Non nfrastructure 8,562 2.427 1,789

INFRASTRUCTURE FINANCING CONTINUES TO Note. Fourth quarter figures are as of December 7, 1996Source: Furomoney Loanware and World Bank.

DOMINATE THE NMARKET. Infrastructure financing

fell both in the fourth quarter and for the year as -- Project finance averages1 996 1996 1996

Currency composition of -- Q2 Q3 Q4loan issues, 1 996Q4 Average size of deals

_ _- -___ _ _' _____ _-___ _ _ syndicated (US$ millions) 69 95 102

Steartig 1% Average maturity of deas

Den 5% (years) 6.5 6.1 6.8

One's 7% Average margin overus5 base rate (bass points) 52 142 148

Secured deas<(percent of project finance) 47 38 33

a. Calcu:ated based on transactions with informat on on cost of bor-row ng ava able.

---- ---- --- ------ ----- --- -b----- s. Deals with extended securec Interest of the nvestors.Socrce: Euromoney Bondware ando \Aood Bank. Source. Euromoney Loanware and World Bank.

Fel,ruanl 1997


of deals for China, Indonesia, and Thailand, Guinea. The bulk of the financing was insured by

which together accounted for the bulk of the the US Overseas Private Investment Corporation

region's volume. (OPIC).

The majority of the project financing loans for Vietnam received a $40 million loan with a 7-

China were in the power sector. Tangshan Sithe year maturity. The loan, which was secured by a

Thermal Power Co. borrowed $128 million for lien over machinery and equipment, will be used

almost 10 years, with project sponsors contribut- to finance a new sugar producing factory.

ing 30% of the project cost in the form of equity. The Republic of Korea raised $123 million in

.rrrrangeo 1The project was backed bv a comprehensive secu- the fourth quarter for the power, construction,

rity package and letters of support from the and vehicle manufacturing sectors.

9 -yeS provincial and municipal governments. China US FINANCING TO EUROPE AND CENTRAL. ASIA

$ 0 0 raQ% n Power Partners I, ajoint venture betveen the cen- INCREASES. Financing arrangements for Hungary,

tral and provincial governments in China, the the Russian Federation, and Turkey increased

Asian Infrastructure Fund, and a second private financing to Europe and Central Asia in the

-r r,hemir.5 sector corporation, borrowed $60 million in a syn- fDurth quarter, for the highest quarterly total of

. .ftiuCSiYVW . .O. ¢E1 1 dication in which the debt to equity ratio was 3:1. the year. United Telecom Investment BV of Hun-The deal attracted strong investor interest and was gary raised $130 million on 9-year terms to finance

oversubscribed. a fixed-line telephone network. OPIC provided

Indonesia's largest financing arrangement was political risk coverage.

a $512 million 12-year loan to two coal-fired power A private electric utility in Turkey raised $267

plants, PT Tenaga Listrik Sibolga and PT Tenaga million to finance power generation equipment.

Listrik Amurang. About 75 % of the projects ($586 The bulk of the financing ($240 million) was

million) is being financed through loan markets, arranged through a US Ex-Im-backed tranche, with

with the rest financed through equity participation. the remainder arranged through a precompletion

The deal was secured through the pledging of land standby facility. A $70 million financing for a Turk-

and assets, escrow accounts, financial covenants, ish glass manufacturer was arranged by IFC, which

and a power purchase agreement. A $138 million provided $30 million. The rest of the financing was

loan with a 14-year maturity and a $40 million loan provided by commercial banks. The government of

with a 10-year maturity were syndicated for the Sen- Turkey borrowed $65 million for highway con-

gkang Gas Field and Power Project. The project is struction in the southern part of the country.

being sponsored by Australian and US corpora- BORROWING IN OTHER REGIONS RENMAINS ElM-

tions, and 5% of the shares are held by an Indone- ITED. In Latin America GM Argentina raised $200

sian corporation. The bulk of the financing was million through two tranches to finance con-

covered by ERG, the Swiss export credit agency, a struction of an assembly line for automobile pro-

20-year power purchase agreement was also put in diction. A $125 million tranche was backed by

place. The project is the first independent natural OPIC and carried a maturity of 6 years; a $75 mil-

gas-fired power producer in Indonesia. lion tranche was not guaranteed and carried a

The International Finance Corporation (IFC) maturity of 4 years. A Colombian company, Elec-

arranged a 9-year $300 million loan for Thai trica de Sochagota SA ESP, tapped the market for

Petrochemical Industry Co. Ltd., for construction $1140 million to finance a power plant in Boyoca.

of a refinery in Thailand. Lebanon Power, the only borrower from the Mid-

The only deal from Malaysia was an $89 mil- dle East, raised $187 million for power stations

lion loan to finance construction. Repayment is and transmission cables. A public utility company

due upon completion of the project. from South Africa was the only borrower from

Oil Search (Gobe) Pty Ltd., operated by a sub- Sub-Saharan Africa, and a private company in

sidiarv of Chevron, secured a $98 million 7-year India that tapped the market for $60 million was

loan to develop two oil fields in Papua New the only South Asian borrower.

I FinancialFlows and theDeveloping Countries

m International lending and capital markets

Market creditworthiness remain manageable, given the country's export

and foreign investment potential from oil and - 5

Egypt is assigned mineral resources. S&P analysts believe the coun- Sovereign foreign

a Ba2 rating by Moody's try's rating is constrained because of the untested currency debtEgypt received a Ba2 Moody's rating for its long- political system and the short track record of tight Long-term ratigs. os of

0 1 ~~~~~~~~~~~~~~~December 2, 1996term foreign currency bonds (table 5). According macroeconomic policies and debt management. Moody's S&P

to Moody's. the rating was based on the country's Investment grode

manageable external debt, the result of substan- Hungary receives Chn e Baa' A-B'China A3 BBS'

tial debt relief extended by creditors in recent investment-grade rating Coombia Baa<' BBB/

years (Egypt rescheduled its external debt twice in In October S&P upgraded Hungary's long-term A+ A

the past 10 years) and macroeconomic policies foreign currency rating from BB+ to BBB-. an CAA-/

that improved public sector finances and reduced investnsent-grade credit rating. and assigned a Czeoh Repub c Baa' A'Greece Baal BBB-

inflation from 20% in 1991 to 8% in 1996. Eco- long-term local currency rating of A-. According India Baa3 BB+/

nomic growth is projected to reach 5% this year. to S&P, the upgraded foreign currency debt rat- BBB+±1Irnoonesad Baa3 SBB/

The Ba29rating places Egyptabove Turkey, Brazil, ing reflects the success of disciplined financial

and Jordan; on par with Mexico and Venezuela; policies that have reduced Hungary's external Malaysia A A+/

and below Tunisia. Government officials believe debt burden. A downsizing of the public sector, Malta Al A+/

that the rating does not adequately reflect Egypt's together with privatization and modernization of aa'BB

economic strength and plan to solicit a rating the economy, is supporting a dynamic export sec- Aaft

from Standard and Poor's (S&P) soon. tor and an improved banking sector. The econ- Slovak Republic Baa3 BBB-/

omv also benefited from a reduction in the Slovenia A3 AA"

Russia and Kazakstan are assigned government deficit from 8.4% of GDP to about South Africa Baa3 BBJ/

credit ratings by Moody's and S&P 4% of GDP in 1996, and a decline in the net exter- The land BBBA +1

The Russian Federation was assigned a Ba2 credit nal public sector debt burden from 126% of Tunisia Baa3 n.a.

rating by Moody's and a BB- rating by S&P in Octo- exports in 1994 to an estimated 54% in 1996. Two Be,ovw investment g.rcde

ber. The ratings reflect policymakers' commit- other rating agencies, IBCA and Duff and Phelps, Argentina B' BB-/BBB-`

ment to an orthodox economic package that had already given Hungary an investment-grade Barbados Ba2 n.

reduced inflation from 131% in 1995 to about rating, and Moody's has placed the country on Braz B B+/BB"5

22% in 1996. Improvements in fiscal policy lo-w- review for a possible upgrade to investment grade. Egypt Ba n.

ered the budget deficit from 40% of GDP in 1992 Hungary Ba' BBB -A-"

to about 7% in 1996 and reduced government Outlook for India improves Jordan Ba3 BB-/

debt to 47% of GDP in 1996, comparable to that S&P revised India's outlook from stable to positive BBB-Saazaesun Ba3 SB-

of other similarly rated sovereigns. Accordina to in November, reflecting the country's stronger Mexico Ba3 BB/

S&P, strong international backing from the donor economic performance and prospects and its BBB+"'

community has strengthened the country's reforms in investment, trade, exchange rate, tax, Paraguay .a. B-/

credibilitv. and financial sector policies. GDP growth has BBS-"

In November Kazakstan received a Ba3 credit averaged 6% a year since 1991, and real exports Philippines Ba2 BB/BBS+--

rating by' Moody's and a BB- credit rating by S&'P. have grown at an average rate of 12% a year. The Romania Ba3 BB_/

Both agencies viewed the country's shift to a current account deficit has been manageable. FDI TnnB-idao Ba BB*

market-based economy as relatively successful, has increased, and external debt has been ser- and Tobago BBB*"

noting that a sharp tightening of fiscal and mon- viced even during periods of severe balance of Turkey Ba3 BUruguay Ba SBB+/

etary policies stabilized output in 1996, reduced payments pressures. BBS-'

inflation from 1,256% in 1994 to 27.5% in 1996, Venezuela Ba- B'

and cut the government's external debt to 15% of Credit ratings are downgraded cuTrencr debt alid toe second to

GDP and 10% of exports, levels that conipare in Pakistan and Turkey domestac currenty oebt

favorably with those of similarly rated sovereigns. In response to Pakistan's worsening financing I Stable out ooK.2. Pos tive outlcok

According to Moody's, Kazakstan's debt should position, Moody's lowered the country's sovereign 3. Negative outlook.

Fefuaty 1J997

International lending and capital markets 0

currency debt rating to BI from B2. Moody's In response to Turkey's rising fiscal and debt

attributed the downgrading to the country's wors- service pressures, S&P downgraded the country's

ening financial position. Pakistan's total debt has credit rating from B+ to B. Turkey owes foreign

increased by 16% a year since 1991, and external creditors about $73.8 billion and is due to pay

debt reached $28.6 billion in 1996. The down- $10.4 billion in interest and principal in 1997. The

grade came when Pakistan's interim administra- piublic sector borrowing requirement widened to

tion was less than a week old, and the country's 12% of GNP in 1996, up from 5% of GDP in 1995.

foreign currency resenves were at just under $650 Analysts are also concerned that debt service pay-

million, enough to cover only three weeks' worth ments will absorb 75% of the government's rev-

of imports. enue in 1997, up from 60% in 1996.


Emerging stock markets LATIN AMERICAN MARKETS GAIN. After a shaky

st:art, stock markets in Latin America recovered

Emerging stock markets are up for 1996 late in the fourth quarter, with all countries except

IFC's Investable Composite Index (IFCI) lost 1 % Peru, Colombia, and Chile posting strong gains in

during the fourth quarter but closed the year up Elecember.

7% over 1995, a strong recovery from the 10% The stock marketrose ll% in Argentina in the

decline in 1995 (figure 9). The Latin America fourth quarter, as confidence in the economy

index rose almost 1% in the fourth quarter, rising returned following announcement of expected

14% over 1995, the largest increase of any region. GDP growth of 5% in 1997. Declining US Treasury

The IF( index for Europe, the Middle East, and bond yields gave a further boost to the market.

Africa fell 4% in the fourth quarter and 5% for the Issuance of government bonds worth $2 billion

year. IFCI'sAsia index declined 0.3% in the fourth was a positive signal to investors, and announce-

quarter but gained 9% for the year. China's mar- ment of a $6.1 billion standby loan from the gov-

ket posted a double-digit gain, while stock markets einment to commercial banks as a safeguard

in Thailand, the Republic of Korea, and Pakistan against financial instability also helped bolster

declined by double-digit figures. market activity.

Brazil's IFC index rose 7% in the fourth quiar-

IFC's Investable Composite Index, by region ter and 30% for the -ear. Confidence in Brazil's

July 1994-December 1996I______ July 1994-Dece m ber 1996 ------ ~ --- ~ ---------- $204 billion stock m arket has risen as a result of a

140 -- - - - sustained privatization program, declining infla-&

juy i994= 100 t v Europe, the Middle East, tion, and the government's announced plan to>sand North Afnra arihere to its monetasy policy.

120--r~ w r - F > - _S~~8 - - -- t----Mexico has the second largest stock market inthe region, with market capitalization of $104 bil-

a~ a / 0 Asia lion. The market declined 1% in the fourth quar-

00 - - - t- ter but was up 18% for the year. According to

S V . , an.alysts, market gains reflect the ongoing eco-

AS eme nomic benefits of Mexico's relationship with the80 - - - - u 05---,t- -- S (a major source of FDI and financial support),

'- ., \u At LatAr America sound economic fundamentals (reflected in a 4%

growth rate), a manageable external debt burden,

60 and continued fiscal restraint that should keep

- - - ~-. tho deficit below 1% of GDP. S&P revised its out-

Source: Internat onal Finarce Corporaton look from negative to positive.

M Financial Flows and the Developing Countries

a Equity portfolio and foreign direct investment

The Peruvian market fell 12% in the fourth Thailand's stock market posted a decline of

quarter, posting a small (0.2%) decline for the 28% for the fourth quarter and a 41% drop for the

year. year. The slowdown in export growth and the high

Chile's stock market fell 13% in the fourth domesticinterestrateshavenothelpedthemarket.

quarter, closing the year down 17%. The decline MARKETS DECLINE IN SOUTH ASIA. India's stock

was caused by high domestic interest rates, which market fell 6% in the fourth quarter, declining 2%

attracted investors to the fixed-income market. for the year, as political instability and allegations

Venezuela recorded the strongest stock mar- of corruption in the second half of the year made indoiesia's stockket in the region, rising 18% in the fourth quarter investors wary. One positive sign was the planned T7arket rose 80/

and 11 8% for the year. The extraordinarv growth introduction of paperless share trading, one of

in the market can be attributed to the govern- the major structural reforms in the country's cap- On the ourthment's steady adherence to an economic stabi- ital markets since foreign investment was allowed uorter end ' 6%lization plan backed by the IMF. in domestic shares in 1993. Once implemented,

PERFORNLANCE VARIES IN EAST AStA. The stock the scripless system, by lowering transaction costs h) t.he yearmarket in China jumped 25% for the quarter and and reducing premiums on global depository

37% for 1996 as the B-share market, aimed at for- receipts over underlying domestic shares, may

eign investors, surged. Early in the quarter prices encourage foreign institutional investors to recon-

of B-shares hit their lowest levels in two years, trad- sider the Indian market.

ing at an 80% discount to A-shares (purchased by IFC's Pakistan index fell 11% in the fourth

domestic investors). Relaxation of restrictions on quarter and 19% for the year, battered by recent

local investors' purchases of B-shares-denomi- economic and political difficulties. Lower antici-

nated in US dollars in Shanghai and HKdollars in pated returns for 1997 in the textile industry-

Shenzhen-fueled a strong rise in the B-share which is the country's largest export sector and

market. The government's announcement in accounts for 25% of the companies listed on the

December that the current accotnt would be stock exchange-was also a factor.

made convertible by the end of 1997 may also have SOUTH AFRICA DRAGS DOWN INDEX FOR EUROPE,

intensified the demand for B-shares. THE MIDDLE ELAST, AND AFRICA. The IFC index for

Indonesia's stock market rose 8% in the fourth Europe, the Middle East, and Africa fell 5% for the

quarter and 16% for the year. Strong economic year, mainly because of a 20% slide in the group's

fundamentals, marked by steady growth of largestmarket, SouthAfrica. Analysts claimed that

exports, have encouraged a continuing flow of investor confidence was reduced by the depreciat-

FDI. The public offering by the state-owned Bank ing rand, a shrinking official growth forecast (from

Negara Indonesia (the country's only privatiza- 3.5% to 3%), rising inflation (from 5.5% in April

tion deal in 1996) also rekindled investor to 8.4% in November), and lagging implementa-

enthusiasm. tion of market-oriented policies. Other markets in

Stock prices in the Republic of Korea fell 20% Europe, the Middle East, and Africa performed

in the fourth quarter, down 39% for 1996. well in 1996. Poland's stock market rose 72%,

Although the economy is growing, investors are reflecting the country's sound economic funda-

concerned about falling exports and a mounting mentals. The stock market rose 100% in Hungary,

current account deficit. The market was also hurt 42% in Turkey, and 17% in the Czech Republic.

by allegations of corruption against political fig- In Zimbabwe the market rose 73% in 1996.

ures and corporate executives and by a 10%

decline in corporate earnings in 1996. New equitiesIn the Philippines, the stock market fell 3% in

the fourth quarter but closed the year up 13%. New equity issues rise sharplyMalaysia's stock market rose 5% in the fourth FOURTH QUARTER ACTIVITY SURGES. The vol-

quarter, closing the vear up 24%. ume of new equity issues from developing

Febrtary 1997


countries rose 131% to $6.9 billion in the fourth INDONESIAN BANK IS LARGEST ISSUER IN EAST

quarter (figure 1O), with Indonesia ($1.2 billion) ASLA. The largest equity issue in the region was the

and Venezuela ($1.1 billion) accounting for sale of almost 50% of the Indonesian government's

32% of new issues. This increase in new issues share of Bank Negara Indonesia (BNI), the first

had been predicted by analysts, who anticipated privatization in the country in 1996 and the first

the new deals that came to the market from state-owned bank to be sold. Three other Indone-

India, Indonesia, Lebanon, Russia, Thailand, sian entities raised $776 million. China raised $109

The vcki57me and Venezuela. million, and two entities from the PhilippinesMost new issues in the fourth quarter were raised $382 million. In Malaysia, investors had

from Asia ($2.6 billion, up from $1.2 billion in the access to the infrastructure sector for the first time,

s S u2si3. .riosU 7 'i third quarter) and Latin America ($2.8 billion, up as Lingkaran Trans Kota raised $149 million. A sec-

cl-ye '3b1./Ijg from $1.5 billion). In addition, two African coun- ond Malaysian entity raised $117 million. As apart

tries, South Africa and Zimbabwe, raised $578 of the privatization of its mineral resources, themillion: the Russian Federation $677 million; and government of Papua New Guinea raised $224

S'S E .c g °, o A 'two countries in the Middle East and North Africa, million in the fourth quarter by selling shares in

Egypt and Lebanon, $114 million and $126 mil- Orogen Minerals Ltd. New issues by the Republic

lion respectively in the fourth quarter. Privatiza- of Korea (not included in the regional total) fell

,c thue .i? tion activity accounted for 61% of issues (by 19% in the fourth quarter, to $253 million.

p; j C1,; .Be j volume) during the quarter, well up from 42% in INDIWX BANK IS LARGEST ISSUER IN SOUTIH ASLA-.

the third quarter. Ainidst political scandals that contributed to mar-

EQUITIES ARE UP FOR THE WEAR. Developing kcet volatility, the State Bank of India tapped the

countries raised $14.5 billion in 1996, some 34% market for $370 million in GDRs. The issue price,

more than in 1995. American depository receipts se t at $14.15 a share, included a premium over the

(ADRs) and global depository receipts (GDRs) underlying domestic price.

accounted for half of all placements. Depository VENEZUIELA LEADS ISSUES IN LATIX AMtERICA. In

receipts are attractive because they offer develop- Venezuela's largest ever initial public offer (IPO)

ing country markets a greater pool of investors the telecommunications company CANTV raised

than local issues, a particularly important consid- $1.1 billion. This was the largest deal to come out

eration for large deals in smaller markets. of Latin America in 1996. The ADRs were listed on

the New York Stock Exchange (NYSE) at $23 aI International equity issues, share.

[by region Mexican entities raised $299 million duringUS$ miiimons

the fourth quarter, an increase of more than 50%4.5 Asia7 1E

LatinAmerica El ove-r the third quarter. The country's largestLatin America7 F-

Other E eq uity offering of the vearwas issued in December

10.8 by Grup Imsa, an industrial conglomerate. The

IPO was 150 million American depositorv shares

(ADSs). The company offered 12.3% of its equity

6.9 at S19 a share, with an option to increase the issue

by 15%.

Multicanal Participacoes, Brazil's largest cable

| > 3.0 television operator, raised $194 million through

an IPO. The issue was priced at $14 a share. Two

other Brazilian entities raised another $155 iil-

1995 1996 996Q3 996Q4 lion in the fourth quarter.---- _______-- -- ---- The only niew issue from Peru in the fourth

Note:Fquityfigures include omnestc tranches.Souce. Eurom oaey Bendvaare anc Word Bank. quarter was the sale of 50% of the government's

OF FinancialFlows and theDevelopin'oCountries


holdings in Luz del Sur, an electricity distributor, company launched Russia's first US-style open-

a deal that raised $171 million. One entity in end mutual fund. The funds will be regulated by

Panama raised $683 million, and an Argentinean the Federal Securities Commission, subject to reg-

company raised $109 million. ular audits, and redeemable daily.

RUssIAN GAS MONOPOLY IS THE MAJOR ISSUE In December Greece's Alpha Credit banking

FROMi EUROPE AND CENTRAL ASIA. Gazprom, the group launched the $30 million closed-end

huge Russian gas monopoly, came to the market Danube Fund to provide equity financing for

inthefourthquarterwithal% placemerntofADSs joint ventures and privatized companies in

with foreign investors. The issue raised $373.3 mil- Romania and other countries in southeast

lion, the largest capital-raising transaction by a Europe. The first three deals approved by the

Russian company to date, with about half the deal fund involve an investment of $4.5 million injoint

placed in the US. The issue was priced at 14.75 a ventures in Romania. Fund managers plan to

share, a higher price than had been expected invest two-thirds of the funds in Romania and the

since valuing the entire company at that price remainder in Albania, Bulgaria, FYR Macedonia,

would make Gazprom one of the world's largest and Moldova. The European Bank for Recon-

energy companies, wNith assets equal to the value struction and Development will take a 20% stake

of the entire Russian stock market. Gazprom may in the fund, making an initial commitment of $3

exercise the greenshoe option and expand the million; the International Finance Corporation

issue by 15%. Analysts believe the deal was imnpor- (IFC) has committed $2 million. Also in Decem-

tant for the Russian Federation's attempts to issue ber, Euromerchant Bank launched the $10 mil-

a benchmark eurobond. In a second deal, 5.24 lion, closed-end Euromerchant Albania Fund,

million ADSs were issued by Vimpel-Communica- which is expected to focus on private-sector con-

tions, the country's largest provider of cellular struction and manufacturing conmpanies and pro-

telecommunications services and the first Russian jects in energy and agriculture. 7Dev i oDeveloping-countrycompany to qualify for an NYSE listing. PRUDENTIAL AILL lAUNCH FUND AIMED AT funds: top discounts

FEW OFFERINGS ARE ISSUED IN THE MIDDLE E.AST ASLA. Prudential will set up the $1 billion Invest- and premiumsAND NORTH AFRICA. Issues from the Middle East Direct Asia in 1997. The fund will provide devel- Percentage difference between net

included a $77 million GDR issue bv Solidere. the opment capital for infrastructure projects and asset vane and share pnce

largest company in Lebanon. The real estate com- growing companies in China, India, and fercertage

panv is rebuilding Beirut's commercial district. In Largest csconts

a second deal in Lebanon the Banque Libanaise -,w> r s Developing countries' Jupiter Interratonal

pour le Commerce issued $35.4 million in GDRs best-performing closed-end Green Inv. Trust pkcequity funds (ordanary shares) -44.38

and $14 million in an IPO. In Egvpt the Suez u I _ Bang adesh Fund -41.42

Cement Company issued $114 million in shares. Percent NMumbe Avera ge retur Jupite European Inv.Market aff[inas Decernber 1996 Trust prc

The company is the first Egyptian industrial com- Cne 3 6.72 (ordinary shares) -39.96

pany to obtain a listing for its GDRs on the Lon- Brazil 3 5.05 CH ChinaEmerging Europe 9 4.42 Investment Ltd. -33 26

don Stock Exchange. India 12 4.13 Sub Anan Fund -33.11

Indonesia 9 3 84 Largest premiums

New funds are created for African, Ceh ssR a a 3 46 Dyniamic EastemrCzech Rpubl c3 2.48 One Fund 54.2

European, and Asian markets Mexco 3 1.94 Sinpinyo Eght Fund 4274

AFRIcA INVTESTMENT FUND IS LAUNCHED. In Argentina | 4 1.91 jupiter European Inv.Latin America l 8 1.91 Trust plc (zero dividend

Novensber, Regent Pacific launched the open-end Emerging markets 23 1.7 preferred shares) 36.30

$50 rillion Africa Investment Fund. The fund will Africa IO °.31 Henderson EurotrustVietnam 5 0.48 plc (zero d vidend

have its primaryvlisting in Ireland, with secondary Turkey 3 0.37 preferred shares) 34.24

listings in Kenya and Botswana. Phi pp.nes 4 0.05 Z-Seven Fund Inc, 25.00Cnhile 5 -4.42 .se sa eebr396

NEW FUNDS ARE LAUNCHED IN EUROPE AND Thailand 33 -8 94 SNteuAe of Deceter ana3 996.al an , U - ~~~~~~~~~Source. Lipper Internatonal Closed-

CENTRAI. ASIA. A Moscow-based investment Scurce Lipper International Cosed-End Funds Service Erd Furds Service.

Februasy 1997


Vietnam. Meanwhile, China is planning to open Caribbean countries, mainly Chile, will provide

its domestic A-share market to a limited number about 11% of projected investment.

of foreign fund management companies in 1997.

The Chinese central bank authorities expect for- Competition to invest

eign fund managers to raise funds from China's in China intensifies

domestic market and invest in A-shares; in return, Competition among foreign companies to invest

the foreign partners are expected to bring in new in China's heavily regulated entertainment indus-

Cn0r,pertio technology. try has become intense, with Disney, MCA, Sony,

direct Viacom, and Time Warner pushing for greatera,njong roreflg-n§ Foreign direct investment access to the market. A US group led by MCA

ccsmccres <and privatization unveiled plans to invest at least $200 million in

iTfvest in G linC ' amusement centers, including moxie theaters andForeign direct investment theme parks, by 2000. Tropicana Dole Beverages

e<u\Sl'i 'g' ~IL to Latin America surges of North America is seeking to develop a citrus-

ente£rt.rTTclnmen,rt FDI in Latin America and the Caribbean growing and processing base in China and plans torebounded from setbacks in 1995 following the invest $20-30 million in processing and distribu-

Mexican crisis and the sharp recessions in ticn facilities in the southern regions. Adtranz, the

Ceccms eritzr?zc Argentina and Mexico. The UN Economic Com- railway systems companyjointly owned by Daimler

mission on Latin America and the Caribbean Benz of Germany and ABB of Switzerland, entered

(ECLAC), in its annual overview of the region's into ajoint venture with Changchun Car Company

economy in December 1996, estimated that the of China to make about 160 rail carriages a year.

region ended 1996 with a record inflow of direct

investment of $30.8 billion, an increase of about South African investors move north

$9 billion over 1995 inflows. A large share of the The gradual easing of South African foreign

increase went to Brazil, Chile, Peru, and exchange controls has encouraged flows of capital

Venezuela, while direct investment in Mexico to East and Central Africa, and South Africans are

remained more or less unchanged from the 1995 gradually displacing European investors in parts of

level of $7 billion. The three largest economies in the continent. Randgold, which entered a joint

the region (Argentina, Brazil, and Mexico) venture with the Canadian exploration company

received about 60% ($18.2 billion) of FDI flows to Pangea Goldfields in 1995, will invest about $4.5

the region. FDI flows reached significant levels in miilion to develop a 1.5 million-ounce ore body in

10 countries. Lake Victoria, Tanzania, and Engen, South

Brazil was the largest recipient of FDI in the Africa's largest oil retailer, announced a 100 mil-

region, receiving $8 billion in 1996, up from $3.5 lion rand investment in an oil terminal at Dar es

billion in 1995. Late in the year GM unveiled plans Salaam. In October South Africa's state-owned rail

to invest $1.25 billion in Brazil's automobile grcup reached a technology transfer agreement to

industry as part of the company's strategy to invest supply computerized data systems to Kenyan rail

$3.5 billion in Brazil by the end of the decade. freight operators. At the same time, the govern-

Argentina also enjoyed a substantial rise in inent of South Africa announced a package of tax

FDI, with about two-thirds of the foreign investors cor[cessions and export incentives aimed at mak-

newcomers to the market. Between 1995 and 2000 ing the economy more competitive internationally

Argentina is expected to attract more than $20 bil- anti improving the balance of trade. Under the

lion in FDI according to ECLAC, 25% of it to be new regulations, foreign and local companies

invested in the automobile industry and 40% in qualify for tax holidays of up to six years on income

food, tobacco, petrochemicals, and construction. generated by new investments. Firms qualify based

US companies will provide about 35% of FDI, and on the geographical location of new plants, the

investors from other Latin American and ty,pe of industry, and the number ofjobs created.

4 FinancialFlows and the Developing Countries

* Equity portfolio and foreign direct investment

Republic of Korea invests in Europe after the financial sector difficulties and large

The Republic of Korea increased its investment depreciation of the lev in the second half of 1996.

in European industrial conglomerates in 1996. As part of its shares-for-loans scheme, the

The primary aim of the investments is "gaining Russian Federation sold another 35% stake in

access to new technologies and skills rather than Sidanko, an oil firm. The government has aban-exploiting low-cost advantages like cheap labor doned plans to sell the telecom giant Svyazinvest,and land," according to a recent UN report. So which was created in 1995 to consolidate the

far the bulk of these investments have gone to state's share in some 85 regional telephone com- The Republic ofWestern Europe, mostly the UK, where Korean panies. Instead, Svyazinvest will merge wvith Ros- Koreo increasedinvestment amounts to more than $1.4 billion. In telcom, the long-distance operator.

addition, Korea's LG group announced plans to In Poland the mass privatization voucher pro- itS investmentinvest $2.6 billion to build a new chip plant and gram ended with the take-up of nearly 95% of the in tCropeonconsumer electronics factory in south Wales. vouchers distributed. Vouchers can be exchanged

Large investments are also expected in Eastern for one share in each of the 15 National Investment !ndustriojEurope and the former Soviet republics, as evi- Funds or sold on the secondary market. A majority conglome,ratesdenced by Daewoo's investment in cars, con- stake (52%) inthePolishbreweryTyskieGornvwas in 1996sumer electronics, and washing machine plants sold to South African Breweries for $75 million.

in Poland. The Slovak Republic's privatization program

sold a 45.9% stake in Nafta Gbely, an oil and

Asia continues to attract storage company, to a local investor. The deal

foreign investors was controversial, with some observers claiming

German investors plan to invest almost $1 billion that the stake was sold for a fl-action of its esti-

in the Philippines. Investments will include $650 mated value.

million in a 990 megawatt gas-fired power plant to The sale of PT Bank Negara, the largest state-

be built by Siemens, a $266 million investment by owned bank in Indonesia, met with ovenvhelming

Deutsche Telekom. and a joint venture between investor response. The stock offerbroughtin $400

Audi and Proton Philippines to assemble Audi million, with 49% offered to international

automobiles in north Manila. investors and 51% to domestic investors. The

Hyundai, the Korean vehicle manufacturer, Indonesian government also sold another 4.15%

plans to invest $103 million in lOjointventures in of its stake in Telkom Indonesia through a $600

India to manufacture components of its Accent million private placement. The transaction fol-

model. The company also plans to invest another lowed the sale of 20% of the company in Novem-

$400 million in its Madras plant. ber 1995, after the offer was scaled back because

Malaysia's government investment agency, of weak market conditions.

Khazanah, with assets approaching $16 billion, Elsewhere in East Asia and the Pacific the

plans to buyv-or form strategic allianceswith-for- Philippines announced another round of privati-

eign companies that have technologies Malaysia zations to begin after the conclusion of the cur-

needs. The agenicy has identified 19 foreign com- rent wave of infrastructure-related sell-offs.

panies that can supply important technologies and State-run social security and pension funds are to

knowv-how. be included in the new round, which is expected

to bolster capital markets.

Privatizations continue In a $1.4 billion joint venture between Kansasin fourth quarter City Southiern Industries (a US rail carrier) and

Bulgaria sold a 60% stake worth $160 million in Transportacion Maritima Mexicana (a local ship

Sodi Devnaya, a chemical firm. The transaction ping company), Mexico sold an 80% share in 4,000

was part of an emergency privatization program kilometers of the railway netwvork along its north-

initiated partly to replenish currency reserves east corridor. The government also announced

February 1997


that it will sell only minority stakes in the 61 petro- In Africa 10 companies or consortia were pre-

chemical plants scheduled for privatization, a qualified to bid for 8 mining operations resulting

reversal of an earlier decision to sell up to 80% of fiom the breakup of Zambia Consolidated Cop-

the plants' shares. per Mines. The deal may become the largest pri-

In Chile the sale of a 37.5% stake in the vatization in the country's history.

hydropower station Corporacion de Fomento de YXL of Malaysia, a relatively small company,

la Produccion was canceled after none of the bids beat out several larger, well-known rivals to pur-

submitted approached the $1 billion asking chase a 51% stake in the largest thermal power sta-

price. tion in Zimbabwe, in a deal worth $231 million.

The domestic tranche of a 30% stake (worth The government of Senegal sold 33% of its

$200 million) in Luz del Sur, Peru's electricity dis- slhares in the national telecommunications com-

tributing company, met with a solid response in pany, Sonatel, to Portugal Telecom International

November. The local share offer, valued at about for $137,000. The government wvill retain a third

$120 million (or 60% of the total), is the second olf the shares, local retail investors will hold 23%,

sale to be offered under the citizens participation and employees will hold 10%.

program, which was created to encourage small The government of Kenya reduced its stake in

investor participation in the privatization process. the Kenya Commercial Bank by 10% through a

The remaining shares will shortly be offered to stock flotation that raised $10.5 million.

international institutional investors. After rejecting a foreign offer to purchase a

Despite the postponement of several other 51% stake in Ameriya Cement Company, the

deals in recent months, Venezuela sold its remain- Egyptian government auctioned off a 10% share

ing 49% share in the CANTV, television network through the stock exchange. Private investors

for $1.3 billion. Thirty percent of the shares were now hold nearly 35% of the company. An addi-

sold internationally, 10% were sold to domestic tional stake in Helwan Portland Cement was sold

investors, and 9% were reserved for employees. to a group of investors for $93 million, and a

In Colombia the largest privatization of the 90% stake in El-Nasr Public Utilities Company

year was the sale of an 80% stake in Banco Popu- was bought for $10.6 million by a Moroccan

lar for about $260 million. investor.

Official flows

Multilateral flows third quarter. Concessional lending through the

Inl-ernational Development Association (IDA)

Multilateral commitments rise 78% accounted for 17% of total Bank Group lending,

3~: VVxlc LanB, New lending commitments from multilateral down from 31% in the third quarter. Ukraine

agencies increased from $8 billion in the third ($917 inillion),China ($700 million),and Mexico

f ~ ;-nm quarter to almost $14 billion in the fourth quarter ($430 million) accounted for 41% of total Bank

<se -,-o Sih Ci',i'n (table 8). Commitments by the World Bank, the commitments in the fourth quarter.

Asian Development Bank, and the Inter-American Mexico borrowed $400 million to support itsDevelopment Bank rose by more than $2 billion Contractual Savings Development Program,

t.3 & ;N,3r Rie3 each. The World Bank accounted for 36% of the designed to introduce a new legal and regulatory

total, up from 34% in the last quarter. framework for Mexico's pension system and to

modernize management of the new social secu-

World Bank commitments rity system. The reform of the pension system will

are up $2.4 billion affect about 10 million workers and their fami-

The World Bank's commitments rose to $5 billion lies, representing about 80% of the formal

in the fourth quarter, up from $2.6 billion in the sector.

. Financial Flows and the Developing Conntries

* Official flows

Ukraine borrowed $300 nmillion in the fourth Other multilateral agenciesquarter to support an agricultural reform program show strong increases

aimed at improving the terms of trade facing agri- The African Development Bank increased its lend-

culture, increasing the supply of inputs to farms. ing operations to $517 million in the fourth quar-

expanding agricultural exports, and improving ter, up from only $24 million in the third quarter.

the efficiency of farm management. In addition, a At $569 million, total lending for the Year repre-

$317 million loan will finance working capital sented a 93% increase over 1995. The Asian Devel-

needed for the efficient functioning of the coun- opment Bank (ADB) approved $3.8 billion in The IFC, thetrv's thermal power generation plant, and a $300 commitments in the fourth quarter, up from only

million loan will support reform of the coal sector. $1.2 billion in the third quarter. Total lending for c rnerciasThe Second Xinjiang Highway Project ($300 the year of $6.7 billion represented a 22% increase investment arm

million) and the Second National Highway Pro- over 1995. A third of these funds were provided by of the Worldject ($400 million) are aimed at enabling China's the ADB's concessional lending arm, the Asian

highway system to cope with the traffic generated Development Fund. The Inter-American Develop- Bank, hasby the country's rapid economic growth. ment Bank (IDB) increased its commitments this established a

Indonesia borrowed $105 million to improve quarter to $4.6 billion in the fourth quarter, up $40 million Smallthe efficiency and quality of railroad service in from $1.1 billion in the third quarter. Total lend-

Java through policy reform, restructuring, and ing for the year of $7 billion represented a decline Enterprise Fundexpansion of capacity. of 5% from its commitments in 1995. Mexico,

The World Bank also approved $281 nmillion in Argentina, and Brazil accounted for 67% of total

loans to th e Philippines in the fourth quarter. The lending from the IDB in the fourth qu arter.

funds will finance the Subic Bay Freeport Project

($60 million), elementary education ($113.4 mil- Bilateral ODAlion), water resource management ($58 million), and Export Creditsand agrarian reform ($50 million).

The IFC, the commercial investment arm of the ODA to decline in majorWorld Bank, has established a $40 million Small industrial countriesEnterprise Fund to promote private sector develop- Plans for official development assistance (ODA)

ment. The fund will finance investments of by industrial countries other than Japan were cut

$250,000 to $5 million in Albania, Azerbaijan, in 1996, largely because of budget constraints. In

Bosnia, Cambodia, El Salvador, Eritrea, Ethiopia, November the UK decided to reduce its foreign

the Lao People's Democratic Republic, FYR Mace- aid by almost $300 million, a decline of 8.4%. The

donia, and centralAfrican countries. The IFC's con- US approved a budget of $12.3 billion in foreign

tribution to each project will range from $100,000 aid in 1996, $66 million less than in the previous

to $2.5 million in the form of debt or equity. budget. Of this amount $1.2 billion will go to mul-

T;ABL!_~ E Multilateral commitments to tilateral agencies ($125 million less than last year);developing countries $7.3 billion to bilateral economic assistance ($58

US$ .inionsc nn l rendnr yeor F 996 /996 million more than last year), with Israel and Egypt

1 1996 Q3 Q4 the largest recipients; $3.23 billion to military

Total 1 41,263 7.817 13 892 expenses; and $634 million to export assistance.

Asfian Development Bank 6569 24 5317 Japan increased its ODA by 2.1 % in yen terms in

Inte-nationa Bank for Reconstruction 1996.and Deve opment 22,040 2 634 4,968

European Bank for Reconstrcston and Deveopment 676 10 n.a Export-Import Bank of Japan lends

Inter-Amencan Development Bank 6 958 1, 31 4 612 to Turkmenistan, IndonesiaInternational Monetary Fund 4,313 2,872 4793

a. Figure availab e for October and November only. The Export-Import Bank of Japan lent $120 mil-Seorce MLltilateral lerding insttunons. lion to Turkmenistan to help upgrade its oil

February 1997

Official flows

refining industry. The loan was the first that the US Export-Import Bank lendsBank has made to the country. EXIMJapan also to Angola, China

lent $126 million to Indonesia for a cement plant The US Export-Import Bank approved support

project, P.T. Indo Kodeco Cement. EXIM is for $200 million in exports by an American energy

financing 60% of the loan, writh cofinancing from company for oil field service in Angola. The oper-

16 private financial institutions led by Fuji Bank. ation is the first for the bank in Angola. US Ex-Im

The government-dominated industry has been also approved $792 million in export financing

unable to keep up with cement demand during for US equipment and services for two power pro-

the recent surge in economic growth, and plans jects in China. China is currently Ex-Im's second

are to almost double cement production by 1998. largest customer (after Mexico).

Debt relief update -

Official creditors expires. Participating creditors also agreed in

principle to consider a stock reduction at the end

Niger and Mozambique receive flow of the consolidation period for each countrv if it

reschedulings from Paris Club remains in compliance with the agreement.

Niger, Mozambique, and Benin reached agree-

ment with Paris Club creditors on concessional Benin concludes stock deal

debt restructurings during the fourth quarter of with Paris Club1996 (table 9). Niger and Mozambique received Benin concluded a Naples-style stock reduction

Naples flow reschedulings (a 67% reduction in deal, providing for a 67% reduction in the present

the present value of debt service falling due over value of debt contracted before March 31, 1989.

the next three years). Creditors agreed to invite The agreement covered about $209 million of

Mozambiqtue to a new meeting on the basis of an outstanding debt and excluded certain debts

appropriate arrangement with the IMF once the (related to state-owned enterprises), which are

current Enhanced Structural Adjustment Facility guaranteed jointly by the government of Benin

an(d other governments.

Paris Club rescheduling_agreements,_January-December 1996jS$ mi;'hens Commercial creditors

Dcate Consolidcted Cut-off ConsolidctionCountry of Ggreement amount date penoo through Terms

Zambia 27 Feb 96 566 I Jan 83 31 Dec 98 Nap es FYR Macedonia reaches agreementHor,duras . 29 Feb 96 1 Jun 90 31 Jan 97 Naples' wilh commercial banks

Sierra Leone 25 Apr 96 39 Jul 83 31 Dec 97 NaplesRussia 15 Apr96 40,200 I Jan 91 stock Graduated In October FYR Macedonia reached agreement

payments in principle with its commercial bank creditors toGhana' 29 Mar 96 - I Jan 83 d Graduated

| paymenlts rest:ructure its share of the commercial debt of theMali | 20 May 96 33 I Jan 88 stock Naples former Yugoslav ia; Slovenia and Croatia recently

Guyana 23 May96 793 31 Dec 88 stock NapesBurkina Faso 20 Jun 96 64 I ,an 91 stock Naples concluded similar agreements. As a result of the

Chad' 14Jun 96 - 30Jun 89 31 Dec 97 Naples agreement FXYR Macedonia will be liable for 5.4%Congo 16Ju 96 1.750 Jan86 30Jun99 Naples of the principal and 3.65% of the interest owed by

Peru . 20 Jil 96 - Jan 83 stock eYemen i 24 Sept 96 1 3 Jan 93 30 Jun 97 NaD es the former Yugoslavia, for a total of $280 million.

Benin 25 Oct96 209 3 1Mar89 stock Nap-es Total foreign commercial debt owed by the for-Mozambique 21 Nov 96 664 I Feb 84 30 Jun 99 Nap es

Niger 19 Dec 96 28 Jul 83 30 Jun 99 Naples mer Yugoslavia is estimated at $5.6 billion. Under

-Not avalable the agreement FYR Macedonia will issue 15-yeara. Includes a sx-rmonth extension in the conso idation pesod.b. 50% reductor on matunties. bonds at an initial interest rate of LIBOR plusc. Terms of reference of tre agreement.d. Incudes only arrears as oflu , ,995.

tt6% to be reduced to 3.5% during the first two

eRepayment pro- es tailored to maintain a certain amount of cebt serite aSource: World Bark. years and 3.75% in the next two years.


* Debt relief update

Peru restructures $8 billion collateralized by US Treasury or French Treasury

in commercial bank debt zero-coupon bonds carrying below-market inter-

In December Peru concluded an agreement with est for the first 10 years, increasing from 2.5% in

its commercial creditors to restructure nearly $8 1998 to 4% in 2008; 20-year front-loaded interest

billion of outstanding debt. Participating banks reduction bonds at below-market rates, increasing

chose from a menu of four options, which from 2% in the first year to LIBOR plus 13/46% inincluded $1,799 million of 20-year front-loaded year 14; and 20-year past due interest bonds, car-

interest reduction bonds, $189 million of 30-year rying below-market interest rates starting with 2% Per-u conrcludedpar bonds, $947 million of 30-yeardiscount (45%) in year I and rising to LIBOR plus 1% in year

bonds, and $2,284 million of past due interest 16.Theagreement,whichisexpectedtobesigned aaremebonds. The discount and par bonds were collater- by the middle of 1997, will reduce CMte d'Ivoire's Wi1'th its

alized by 30-year US zero-coupon bonds. Peru also commercial debt by nearly 79% in present value commercialretired $1,266 million of eligible principal terms.

through a buyback at 38 cents on the dollar. The creditors to

operation, whose costs totaled $1.4 billion inclu- Senegal restructures $75 million restructuresive of cash payments, buybacks, and collateral, in commercial bank debt

nearly $8 bill,f01reduced Peru's commercial debt by $3.2 billion. Senegal reached an agreement with its creditor n

banks to restructure commercial debt totaling $75 of outstandingC6te d'Ivoire restructures $7.2 billion million. Under the agreement creditors may partic- Jet

in commercial bank debt ipate in a bnlyback at 16 cents on the dollar or in a

C6te d'lvoire reached agreement with its London long-term payment letter (effectively a bond

Club creditors to reschedule $7.2 billion of its exchange) collateralized byUS zero-coupon bonds.

commercial bank debt, including $2.6 billion in The bonds will have a maturity of just under 30

principal arrears and $4.6 billion in interest years, equivalent to a net present value of 16 cents

arrears. Included in the menu of options are a per dollar, and will be transferable and convertible

buyback at 24 cents on the dollar, with past due for a period of two years. Collateral for the deal is

interest being canceled on debt bought back being financed by the World Bank, France, the

under the agreement; 30-year discount bonds Netherlands, and Switzerland.

* Financial brief

Determinants of Japanese FDI of world FDI. Developing countries have captured

A recent paper analyzes the emergence of Japan a declining share ofJapanese FDI over the past 20

as the world's major supplier of FDI since the years, however, with the lion's share going to the

1980s.1 Using pooled cross-country and time developed markets of the US and Europe (figure

series data on a country sample that includes nine 12). Among developing countries only the newly

industrial and eight developing countries in Asia, industrializing economies of East Asia (such as

the study examined the impact of exchange rate Hong Kong, Singapore, and Taiwan, China) have

changes, profit and tax policies, and research and maintained a relatively stable share of Japanese

development expenditures on the direction and FDI. Understanding the determinants of the

volume ofJapanese FDI. explosive growth in Japanese FDI is a significant

FDI outflows fromJapan rose from an annual issue for many developing countries that desper-

average of $3.3 billion during 1971-80 to $27.4 ately need increased inflows of capital.

billion during 1981-89, dipped in 1989-92 (as Exchange rates. Exchange rate variations have

real estate and stock prices collapsed), and affectedJapanese FDI, althouglh the direction of

rebounded in the mid-1990s (figure 11). By 1994 the impact has changed over time. During the

the stock ofJapanese FDI represented about 12% first half of the 1980s the real depreciation of the

Februa?y 1997 m

Financial brief

yen was associated with increasing outflows of partly to create demand for their exports. The

FDI, a finding that is contrary to traditional depreciation of the yen improved the profitabil-

expectations since investment increased as the ity of Japanese exports, thus increasing the incen-

relative cost of domestic production declined and tive for FDI. By the mid-1980s, however, the

the yen price of foreign assets rose. The finding nmotivation behind Japanese FDI may have shifted

may reflect the nature of Japanese FDI during to-ward production of goods in which Japan was

this period, whenJapanese firms invested abroad losing its comparative advantage. During

-Ts 1986-92 the real appreciation of the yen wasJapanese FDI, 1982-94 accompanied by increases in FDI, as JapaneseUS$ bllons

firms invested overseas to avoid the increasing

80 c---- ost of production in the home market.

Profit and tax considerations. Profit and tax con-

/ . >oJaponese FDI . siderations appear to have had a stronger impact60 ------ o----- ---- ----------- ----. ------------ c. the volume and direction ofoJapanese FDI than

4J i . conventionally believed. Previous studies have dis-

/ \ counted the role of profitability because of evi-

40 ~~~~~ ~ ~~~ -- - --- ----/F ---,- - ---- -- --- < - - Ss,i/' dence of risingJapanese FDI and low profitability

on investments in industrial countries during the

past 10 years.20 --- ---- --- ---- -- -- Reported accounting profits on Japanese FDI

may not be an accurate indicator of true prof-

itability, however. Rates on corporate profits

< i i ~~~~~~~~~~~~~~(i:ncluding on income earned from overseas982 983 i 984 1985 !986 1987 !988 1989 1990 199j 1992 i 993 i 994

-__ investments by Japanese residents) are high inSource: Japanese Miristry of Finarce, Finonciol Statistics of Jopan. and Monthly F0 a-nyc- Renew s, various ssues. Japan, buit the system allows a credit for taxes paid

:- ~~~~~~~~~~~bs a Japanese investor in the host countrv. As aRegional distribution of Japanese FDIpercent result, Japanese tax rates are likely to determine

the effective tax rate on income from Japanese

5Al Europe F)I, and reported after-tax profits of Japanese

Asia overseas firms may understate the full benefit of

40 U Latin America the investments.

| Other g The empirical results provide some support

30 g | for this view. The profitability of local investments

in the host country was found to be a significant

determinant of Japanese FDI, while changes in

20 u i local tax rates appeared to have little effect.

In creases in the effective tax rate on corporate

0 investment in the US after the 1986 Tax Act, forexample, were associated with a suirge injapanese

FLuI to that comunry. It is possible that the increase

1971-80 1981-85 /986-90 1991-94 in US taxes in 1986 may have actually improved

Soea ,nne c o n aneniy -anc- Faccthe profitabilitv ofJapanese FDI, since the higherSource- 3ank of Japan, B3iance cf Payme,-,ts, varous issues: Japanese M nist-y of Fi-ance, Finencda Stotistics 3f'

jopon; and Monthy Fancalde Renes, va-ios issues tax: rate may have reduced investment by domestic

4 Financial Flows and the Developing Countries

Financial brief

firms, thus increasing the pretax rate of return on much Japanese FDI in the second half of the

capital without greatly affecting the tax regime 1980s was, in fact, made to obtain technological

facingJapanese investors. knowledge.

Research and development. Countries with rela-

tively high expenditures on research and devel- 1. Kwang W. Jun and Joosung Jun. 1996,

opment received a relatively high level of 'Japanese Foreign Direct Investment: Trends and

Japanese FDI. In the past, studIies have argued Determinants," World Bank, International Eco-

that FDI depends, at least in part, on the presence nomics Department, Washington, D.C.

of valuable technological knowledge that is held 2. See K Kojima, 1993, "A Macroeconomic

exclusively by the multinational firm. In contrast, Approach to Foreign Direct Investment," Hitosub-

this study supports Kojima's argument that ashi Journal of Economics 14(1) and K. Kojima and

Japanese FDI is in part motivated by efforts to T. Ozawa, 1984, "Micro- and Macro-economic

obtain the technological knowledge ofhost-coun- Models of Direct Foreign Investment," Hitotsub-

try industries.2 Anecdotal evidence suggests that ashijouirnal of Economics, 1984, 25(1).

1Febltuay 1997

Stiatistical app endix

T ',3L-,. I New bond issues for 1 996Q4Bonds greeter then US$ 150 million

Total

nomina!

eamount

equivaierrt, Indstry issue Issue Spreed FOnraIssuer country mriions) Issuer Issuer type sector Currency prce type at eunch coepon faterity

Russia 1,000.0 Russ an Federaton Govemrnment SG US$ 99.56 Fixed 345 9.25 5 yearsArgent na 1,000.0 Republic ofArgentina Government SG US$ 99.58 Fixed 445 11.00 10 years

Maaysla 800.0 Petroliam Nasiona Bhd (Petronas) Pub c OG USS 9979 Fxed 57 7.13 0 yearsBrazil 750.0 Federative RepublicofBrszi Government SG JS$ 99.86 Fxed 265 8.88 5 years

Greece! 656.4 Hoenic Republic Government SG DM 01.70 Fixed 80 6.75 0 yeaesArgentinal 649.2 Republic ofArgentina Government SG DM 01.25 Fixed 295 8.50 8 years 2 months

Malaysia; 600.0 Petrol am Nasional Bhd (Petronas) Public OG US$ 99.62 Fixed 38 6.63 5 yearsMalaysia: 500.0 Petro am Nasional Bhd (Petronas) Public OG US$ 98.65 Fixed 84 7.63 30 yearsTurkey 497.2 Republic of TLrkey Government SG DM 10 .35 Fixed 280 7.63 5 years

Argentina 444.. Repue c ofArgentina Government SG YEN 99 00 Fixed 346 6.00 8 years 4 monthsArgentina 396.1 Repub ieofArgentna Government SG L-a 100.75 Fxed 276 10.00 0 yearsArgentina | 328.3 Republic ofArgentna Government SG L ra 1006. Fixed 305 1.00 7 years

Mexico 326.9 United Mexcan States Government SG DM 101.98 Fixed 3 8 8.13 7 years I montnsArgentina' 324.0 Republic ofArgentina Government SG DM 01.25 Fxed 497 .75 30 yearsThailanrd 300.0 Tota Access Communications Pr vate TC US$ 99.77 Fixed 200 8.63 10 years

Public Co LtdSouth Africa 300.0 RepUD c ofSouth Afrca Government SG US$ 99. 2 Fixec 195 8.38 10 years

Mexico 300.0 Petroleos Mexcanos PRi c OG US$ 99.80 Fixed 175 7.75 3 yearsBrazil 2500 Globo Comunicacoes e Private MP USs 99.44 Fxed 437.5 10.50 10 years

Par-icipacoes LtdaBrazil 250.0 Petrolec Brasile ro SA Petrobras Public OG US$ 99.78 Fxed 350 0i00 0 years

S ovak Repub c, 200.0 Vodohospodarska Vystavba Government EU US$ 99.69 Fixed I i5 7.25 0 yearsPhilippines 200.0 JG Summit Pn ipp nes Ltd Private IC US$ 99.53 Fixed E80 8.00 5 years 6 months

Mexico 200.0 Trnsportacion Maritima Private TS US$ 99.63 Fixed 395 10.00 10 yearsMexicana SA de Cs'

Mexico 200 0 Banco Nacional de Obras Pub ic BF US$ 99.72 Fixed 358 9.63 7 yearsy Servicios Publicos SA

Kazakstan, 200.0 Republic of Kazaksastan Government SG US5 99.87 Fxed 360 9.25 3 yearsArgentina F 199.9 YPF SA Public OG Era 100.98 Fixed 209 8.75 5 years

a. AM s automotive, BF s banking-financial services, CB is central ba-k, CM is chemicas, CN is construction, EC s electronics-electrica, EN is enggneering, EU is energy util-y., FC s financiascsrpsra:e, FD is fooc and drink, FP is forest procucts-packaging FR is fiancia repackaged, HC is healthcare pha-maceu:ical, C is ndustra-conglomerates IS s iron stees, T is nvestmenttrust company, LA is loca authorty, MA s manufacturrg, MO is metals and ores MP s media-publishirg, OG sol-coal gas, RC is retalirg consume-goods, RE s real estate RELis raiways, RPis rubber pastics SG is state authorty-government TB s tobacco, TC is telecommunications, and TX s teti es-coth ng,Souree. Euronmorey 3Sncware

Em Financial Flows and the Developing Countries

Statistical appendix

_TL o'l New loan issues for 1996Q4 ___

Loon amount grecter than US$ 150 milWionTotal

omountBorrower Borrower (US$ equ!voient,

COLcr/,t} Borrocver 'cme type Carrency milnions) 'Voturty Alargo0

Mexico United Mexican States Government US$ 6,000.0 5 years LIBOR: 200 bpCzech RepLrb c I SPT Telecom AS Publ c US$ 750.0 5 years LIBOR: 25 bp

Chie Co lahuas Mining Project Private US$ 500.0Indonesa PT awa Power Private JS$ 494.0 15 years LIBOR: 50 bpIndonesia PTJawa Power Prvate US$ 396.0 4years LIBOR: 138 bpIndonesia I PT Gajah Tunggal Nederland BV Prvate USS 360.0 5 years LIBOR: 97.5 bp

Indonesa PTTenaga LstrikSibolga, PTTenaga LstrikAmurang Private IDRb 512.1 2 years JIBORTha and Tha Petrochemica Industry Co Ltd Private US$ 300.0 9 years LIBOR: 175 bp

Russia Oskol Electrometallurgical Kombinat (OMK) Public DM 265.6 8 yearsTurkey Trakya Elektrik Uretmn ve TicaretAS Prvate US$ 240.0 3 yrs 6m LIBOR: 25 bp

China Hua Fei Colour Disp ay System Co Ltd Public US$ 200.0 5 years LIBOR: 100 bpLebanon Lebanon Power Private US$ 187.3

Colomb a Compania Electrica de Sochagota SA ESP Private US$ 140.0Hungary UTI-United Telecom Investment BV Private US$ 130.5 9 years LIBOR:250 bp

China Tangshan Scthe Therma Power Co Ltc Public JS$ 128.4 9 yrs 9m LIBOR.225 bp, LIBOR: 190 bpArgentina GM Argentina Private US$ 125.0 6 years LIBOR:90 bp from I yrto 2 yrs.

112.50 bp from 3 yrs to 6 yrsIndonesia Sengkang Gas Field & Power Project, PT Energi P. ivate US$ 14.6 14 years LIBOR: 125 bp, LIBOR: 137.50

_ Sengkang (PTES) bp, LIBOR 150 bp

a LIBOR s London irterhank offered rate; JIBOR is Jeddah interbank offerec rateb. Indonesan apiah.Source. Eurormoney Loanware.

Febntasy 1997


ABLE A.3 New equity issues for 1 996Q4Tote!

nosmino, BhGrearnount offer

(US$ pnce! equivcient Shore (US$

Issuer country | m,liions) typea Issoer eoulemoient)

Argentina 27.0 A,X,M Banco de Ga ic a y Buenos A res SA 18.008 1.5 A,X,M Banco de Ga ca y Buenos A.res SA 8.00

Total 08.5

Brazil 52.0 ,S.G Brazil RealrySA Emoreendimentos e Participacoes 20.00j 8 0 I,S Brazil Realty SA Empreendimentos e Participacoes 2.0556.5 I,G,X Bompreco SA Supermercados do Nordeste 16.5028.8 I Bompreco SA Supermercados do Nordeste 8.4738.7 I,A,M,X Mult canal Partopacoes SA 14.006.3 IA,MX Mult canal Partic pacoes SA 4.00

38.8 I,M Muticanal Participacoes SA 44Tota 349.3

China 6 I Chongqing Chargar Automobi e Co Ltd .8920.6 1 Huangshan Tourism Development Co Ltd 0.2626.8 R Konka Group Co Ltc 6.28

Total 108.6

Chile 6 9 A,M,X Compan a Cervecerias Un das SA 6.0027.7 AMX Compan a Cereeras Unidas SA 6.00

Tota ! 34.6

Egypt I114.3 G,X Suez Cement Comnpany SAE 14.75Total 14.3

Hungary 22.2 GV X BorsodChem Rt 8 50Tota 22.2

Indonesia 194.5 ,V PT Bank Negara Idonesa(Persero) 850.00202.4 IV PT Bank Nega-a I rcones a (Persero) 850.00

69.6 G,X PT Kawasan Industr Jababeka Tbk 11.0947.0 i PT Sierad Produce Tbk 900.0048.9 I PT Sierad Produce Tbk 900.00

6 610.6 B.V PT Teekornunikasi Indonesia (Pesero) 3,700.00Tota i 1,173.

India ! 370.0 G,X State Bank of India 14.15Total 370.0

Lebanon 77. I G.X Solidere I .5035.4 G,J,X Banque Libanais pour le Commerce 80

3.7 I Barcue Libaras pour e Commerce .20Tota l 126.2

Litnuania j 6.0 C B za: MilkJont-Stock Co 12.50Total 1 6.0

Ma ays a 1 .0 I L ngkaran Trans Kota Ho d ngs Berhad- LITRAK 5. 1037 9 I L rgkaran Trans Kota Ho d ngs Berhad- LITRAK 3 60

1 7.3 B Sime Darby BerhaJ 8.95Tota j 266

Mexcoa 48.0 C,U,X ControladoraConmercial MexicanaSAdeCV 18.4619.8 U Controladora Cornerc:a Mex cana SA de CV 7.00

22.2 A,X,M GRUMA SA de CV 18.5044.4 A,X M GRUMA SA de CV 8.5022.4 M GRUMA SA de CV 37.0038.0 I,A,M,X,U Grupo Imsa SA de CV 9.0066.5 I,AM,X,U Crupo msa SAde C\/ 190037.8 MX,U Crupo msaS A de CV 16.63

Total 299.1

Papua New Gu nea. 0.4 1,V,GM,X OrogenMinerasL:d 2.0041 2 I,V.M,X Orogen Minerals L:d .7036.6 I,V,M,X Orogen M ne,als L.d 1 5735.4 ,V,M,X Orogen Minerals L:d 2.00

Total 223.6

0 Finanacal F lows and the Developing Countries


.>0 +3 New equity issues for 1996Q4 (continued) __ _ __ __

Totranominal Share

amount offer(US$ price

equivalent, Share (US$Issuer countl r m'Hllons) typea lssuer equivaient)

Panama 136.6 I Carnival Corp 29.50546.2 I Carn val Corp 29,50

Total 682.8

Peru 2 1.8 A,V,M,X Luz del Sur SA 18.004 .9 v,M LuzdelSurSA 3.1006.9 V,M Luz del Sur SA 3.10

Total .70.7

Ph pp nes 01.5 I Dygtal Telecommunications Phi s Inc 0.1 143.5 I Dgital Telecommunications Phils Inc 3.00

i 1 27.1 X Bank of the Philippine Islands 125.0009.5 Bank of the Philippine Islands 125.00

Total 38 1.8

Russia 429.3 A,l,X PRAO Gazprom 15.7530.5 I,A,X,M V mpel-Commun cat ons 20.5097.0 I,A,X,M Vimpel-Communications 20.50

120.4 A,,X AO Tatneft 45.00Total 677.I

Sourh Africa 93.3 A,X AECI Lto 23.00413.2 A South African Brewe-ies Ltd 25 43

Total i 506.5

Thailand 28.2 X Siam Makro Pub ic Co Ltd 102.0034.5 Siam Makro PubicCo Ltd 102.00

Tota 62.7

Turkey 1 1.8 I,X SASA Sun i ve Sentet k Eyaf Sanay AS 7,200.00| 15.8 I SASA Sun i ve Sentetik Elyaf Sanayi AS 7.200.00

Total 27.6

Venezrela 36 .6 A,l,M CANTV Compen a Anonima Nacional Telefonos de Venezrela 23.00542.3 A,l,M CANTV Compania Anonima Nacional Telefonos de Venezuela 23.00239.7 I.M CANTV Compania Anonima Naconal Taelfonos de Venezuela 1,546.75

Total - 143.6

Zimbaowe 1 71.5 MeiklesAfrica Ltd 1.32Total 7 .5

Note. Numbers may not sum to tolas shown because of rounding.a. A isAmerican depostory, B is boughtdea./block, F sfund, G is goDa depository. I is initial puebic ofer, M :s mu ttranche, Vis prvatization, and X isCrossborder.Source Furomoney Sondware.

February 1997


Bank and trade-related nonbank claimsUS$ millions

1995Q4

Trnde reltedBonk Guaronteed nonbGnk

County group or country 199 1992 1993 1994 199qqQ2 Tetol caoims cloims doims

All developing countries 746,945 781,927 792,838 848,869 922,449 948,159 770,668 125,838 177,491EastAsia and the Pacific 131,902 154,326 171,581 208,466 24 194 271,368 236,642 25,684 34,726

Europe and Central Asia 189,401 189,423 193,1 13 198,304 224,068 223.455 183,766 34,080 39,689Latin America and the Caribbean 244,805 257,599 258,058 264,069 267,949 27 1309 234,934 30,106 36,375

Middle East and Nonrth Africa 100,0 18 95,751 92,040 95, 99 i 00,662 94,606 59,567 20,967 35,039SouthAsia 21,566 25,083 23,265 26,322 28,233 27,976 23,198 6,873 4,778

Sub-Saharan Africa 39,253 59,745 54,781 56,509 60,343 59,445 32,561 8,1 28 26,884

Severely indebted middle-income 250, 92 256,703 256,648 261,744 266,642 265,052 223,1 69 24,243 41,883Argentna 36,356 39,640 35,671 38,942 41,397 41,748 35.033 3,406 6,715

Bolivia 534 604 691 681 746 734 407 35 327Brazil 71,931 74,069 76,872 70,897 74,775 78,166 68,867 3,261 9,299

Bulgaria 8,909 8,067 7,140 3.899 4,061 3,728 2,892 424 836Gabon 2,051 1,952 1,828 1,822 1,741 1,755 64 133 1 14

Ecuador 4,553 4,198 3,661 3,926 3,338 3,565 2,972 360 593Jamaca 737 753 717 865 380 920 657 150 263Jordan 3,297 2,869 2,700 2,575 2,629 2,769 1,587 700 1,182

Mexico 72,485 75,687 78,819 85,699 8 1,895 78.512 7 ,091 3,817 7 421Panama 22,926 22,725 23.955 26.235 26,845 25,626 25,407 164 219

Peru 6,143 6,423 5,972 6,357 7,334 7,891 4,61 1 233 3,280Syrian Arab Republic 1,107 1,034 1,229 1,263 1 366 1,2 14 564 51 650

Severely indebted low-income 57,1 81 58,425 56,573 55,963 59.828 57,055 3 1,819 5,659 25,236

Moderately indebted low-income 23, 41 26,579 24,397 27,042 29,05 28771 23,554 6,764 5,217

Moderately indebted middle-income 284,336 29 390 283,426 290.960 314,910 316,5 9 246,503 59,511 70,016

Selected countriesa 339,536 366,096 383,9 12 428,9 3 465,643 492,219 414,333 72.947 77,886Chile 9,149 1 1,188 1 1,293 13,674 i3,791 15,687 4,396 829 1,29

China 41,381 48,566 56,299 66,736 72, 67 77,690 67471 I1,324 10,219Colomba 8,479 8,795 9,244 0,330 1 ,196 12,014 10,825 1,517 1,189

Cote d'lvoire 4,042 3,986 3,625 3,532 3,684 3,521 2,052 296 1,469Egypt 13,569 1 886 10,448 0.049 10,520 1 0,774 3,194 1,252 7,580

Hungary I 1,151 9,289 8,004 8,761 9,51 1 8,889 8,108 806 781India 15,383 18,601 16,460 18,308 19,351 18,990 16,135 4 178 2,855

Indonesia 39,773 46,967 44,730 50,126 56,726 60,549 51,065 7,0 16 9,484Maaysia 10,062 12,886 7,937 16,853 18 865 19,886 17,762 1,8 8 2,124

Morocco 8,053 7,994 7,410 7,747 8,180 7,501 5068 2,678 2,433\igeria 12,896 13,386 2,348 12421 13,999 3,174 3,164 1,605 i 0 010

PhiliDpines I I,839 1 063 10 7 5 1 1 370 12,486 12 907 8,155 2,315 4,752Thailand 24,953 30,552 37,872 59,581 76,729 96,1 18 90,165 2 9 1 9 5,953

Turkey 23,094 24,425 29,238 24,442 26,445 27,725 23,792 8.538 3,933Uruguay 1,991 2,58 2,776 2,483 2,415 2,962 2,847 61 I 5

Venezuea 19,475 20,158 18,672 16,198 15,868 14,757 13 80 5,043 1,577

Offshorebankingcenters 119 142 135.967 147,872 154 94 178,079 186673 1793 6 6,073 7,357

Oil exporters 185,856 187,950 133,775 135,689 41,67 133, 58 86,81 28, 32 46,347DRS reporters 139,563 142,242 87,385 82,219 85,891 82,081 51,127 24,519 30,954

DRS reporters 673, 82 708,689 781,915 851,91 933,903 964,685 8I2,416 119,902 52,269

Note- See country c assifications at the erd of th s stat stica appendix.a. Most of these cocntr es are also included in the indebted country groups.Source: OECD; 8ank for Internat onal Settlements, Stotistrs on Externci Indebtedness.



rAELEA.S Commercial bank claims on developing countriesUS$ millors

Claims Liabilties

Country group or countrry j 1994 1995Q3 1 995Q4 1996Qi I994 995Q3 995Q4 1 996Q I

All developing countries 69 9 19 763,108 794,934 80 R500 605.5 15 686,849 702.726 709,867EastAslaandthePacific 175.202 2i7,988 237.009 244,893 96,641 101,651 103,666 102,677

Europe and Central Asia 1 56,330 78.400 182,202 187,175 121,972 150,478 50,969 151519Latin Amerca and the Caribbean 231,051 235,497 247,433 245,615 160,895 191,636 205,400 208,626

Moddle Eastand NorthAfrica 73,837 71,920 67,102 63,912 139 970 49,486 47,470 148.738South Asia 23,852 26.751 27,777 27,8 6 52,958 57,515 59,378 63,165

Sub-Saharan Afrca 3 3.647 32,552 33,41 1 32,089 33,079 36,083 35,843 35, 42

Severely indebted middle-income 226 216 229,334 237,467 236,221 .48,825 178.804 186,556 186,749Argentna 32,552 34,08. 34,918 33,900 19,181 21,646 24973 24,692

Boliva 414 420 508 501 960 911 998 1,097Brazil 61,794 68.353 73,153 75,496 35.840 58,540 60,271 59,579

Bugara 3,153 2.952 2,829 2,655 1,596 1,816 1,881 1,494Gabon 763 596 638 591 646 731 695 757

Ecuador I 3,253 2,943 2,846 2,972 3,495 3, 96 2.303 2,641Jamaica | 604 602 554 543 816 .096 954 959Jordan 1,352 1,269 1,333 1,205 6,334 6,700 6,675 6,654

Mesico 76,833 70697 73,324 71.871 25,876 27,531 33,525 33879Panama 33,264 34,427 33,344 32,132 40,348 42,390 39,465 39,500

Peru 3.320 4, 35 4.978 5,317 5,251 4,313 4,551 5,096Syrian Arab Republic 575 586 557 543 6,050 7,046 7.533 7,721

Severely indebted low-income 31,922 31,243 31,496 31,281 36,255 36,805 37,321 37,044

Moderately indebted low-income 20,887 23.857 23,894 24,626 20,400 22,845 21,698 23,703

Moderately indebted middle-income 217 989 235,484 239,197 243,788 175,527 190,976 194,017 189,513

Selected countries' 348,464 388,142 4.0, 82 415,554 231,059 244,941 249,832 250093Ch le 12,284 1 2,768 3,900 13,223 11,402 1,428 11,999 11,6 18

Ch na 5 5r,464 61,564 67,077 70,185 59.952 57,803 57,428 55,023Colomba 9,005 10,279 10,53 10,751 8,547 7,522 7,436 7,414

Cote d Ivo re 2,040 994 .959 1,847 2,226 2,149 2,075 2,278Egypt 3,074 3,014 3,101 2,972 27,970 29.305 27.265 25,133

H-ungary, 7,928 8,148 8,036 7,646 1,967 1R846 2548 2,393India 5,488 16,667 7,049 17,443 10,382 12,751 12,609 14,568

Indonesia 41,621 48,466 48,935 50,484 10,388 1 387 1 1,482 1 1,657Maaysia 14,477 16.733 18,750 19.018 10,324 11,853 l3,034 15.1 16

Morocco 5.050 5481 4.916 4,861 6,703 6.509 6,225 3,029Nigeria 3,642 3,211 3,067 2,991 4,594 3.7 1 4.001 3,708

Phil[ppines 6,543 7,370 8,076 8,890 6,749 6,507 7,339 6,483Thailand 54,442 82,196 92,160 94,31 1 7,041 11,547 1 1,807 1,700

Turkey 16,969 19,882 20,272 20.644 18,9 1 24,560 23,800 24,471Uruguay 2.380 2.359 2.989 3.151 5.507 5,558 6,272 6,292

Venezuela 13 376 12,100 1 1 684 1 1,441 20,864 2 .722 20,502 21,593

Offshore banking centers 1,164 365 1,276,984 1,285 460 1.254,556 .052,276 1,073.833 1,083,943 1,070,932

Oil exporters 103,349 101,791 99,238 98,860 162,511 169,768 169,143 177,911DRS reporters 50,944 49.224 47,895 46,852 43.672 45,135 44,506 44.527

DRS reporters 709,691 795.852 830,079 845,154 533,388 602,786 611,671 6 4,331

Note See country c assifications at the end of this statistcal apperdsx.a. Most of these countries are also ncluded in the inoebted country groupsSource Bank for International Settlements, lnterrotnoal Boneng and Financtol Morket Developments.

Februa?y 1997


3LE A Commercial bank claims on developing countries, by country of ol-igin _ __ _ _ _US$ miilions

Ccrnsod Germonya

CounL-y group or countr/ i 993 1 994Q4 1995Q1 I 1995Q2 ! 995Q3 995Q4 ! 996Qi 1996Q2

All developing countries 6,587 14,936 15,89 16,830 74, 24 80,561 184,194 180,069EastAs aand tle Pacic .. 26 1,479 1,348 1,401 20,785 24,033 25,805 24 607

EuroDe and Central Asia 490 302 304 287 72.386 72,533 73,534 69,901atn America and the Carbbean 1 14,128 2,220 3,061 13 817 34,597 34,766 34,900 35,329

Middie Eastand NorthAfrica 295 342 313 465 17,070 16.985 6 537 16,170South Asia 438 433 570 564 10,439 1 1,102 ,i72 0,9 14

Sub-Saharan Africa 10 160 294 296 7,861 8,063 8.384 8 285

Severely indebted middle-income 6,034 6,329 6,546 6,387 35,891 36,217 36,5 6 37,249Argentna 680 709 793 917 8,495 7897 7,698 7,970

Bo ivia - -- 3 433 431 416 434Braz l 2,736 2,383 2,422 2,388 11,070 10,934 i 1,621 12,333

Buigaria - - 1,200 1,150 1 26 1,077Gabon -- -- 56 58 54 49

Ecuador - 246 207 201 208JamaicaJordan - - - 530 534 517 525

Mexico 2,312 2,926 3 004 2,7 i4 4,8 5 5.369 5,160 4,99 Panama 234 225 240 276 2,426 2,908 2,694 2,779

Peru 73 87 87 90 982 975 942 921Syrian Arab Republic 645 645 691 683

Severely indebted low-income - - 16 5 330 6,429 6,673 6,130

Moderately indebted low-income 224 264 335 250 10,394 10,685 0,579 10,407

Moderately indebted middle-income 2,049 2,265 2 395 2,26 72,695 72,146 72 7 2 71,089

Selected countriesb 4,829 5,918 6,0 6 5,639 55 621 59,462 60,506 58,655Chile . 476 540 598 607 .752 1,910 1,832 1,950

Chna 255 473 410 491 6261 7,021 7,915 5,339Colombia - - - 7 ! 6 .902 1,866 84

CGte dlvoire - - - 358 379 369 354Egypt - - - 2,876 2,902 2.822 2,804

Hungary -- - 4,224 4,340 3,997 3,619India 224 260 335 250 7,892 8,139 8,193 8, [5

Indonesa - - 7.058 7,497 8,164 8303Malaysa 38. 297 234 248 ,233 ,326 1,291 1,479

Morocco - - -- 1,276 ,257 1 78 1,214N geria - - 569 553 497 478

Phillpones 266 297 322 223 760 805 797 854Thaiand 224 412 382 440 5,222 6,318 6,649 7,579Turkey - 8.245 8,277 8,442 8 633

Uruguay - - ---Venezuela 688 675 709 649 1,252 !.286 1,203 1,174

Offshore banking centers 0,602 1 ,610 2,046 13,486 06,256 122,347 13 .402 26,849

Oil exporters ,088 1,383 1,420 1,432 .5,987 16,840 17,259 6 C86DRS reporters . 037 1,247 1,297 1,272 8,656 8,499 7,829 7.474

DRS reporters 12,255 1,908 2,802 13 226 154,452 158 778 61,162 157,147



Commercial bank claims on developing countries, by country of origin (continued)JS$ mislions

Itoiy Netherlondsc

Country group or country | /994 1995Q4 1 996Qi 996Q2 1993 / 994 1 995Q2 1995Q4

All developing countries 27,346 27,977 27,1 11 27,494 22,232 26,041 28,523 28,647East Asia and the Pacifc 1 52 33 50 54 3,527 5,161 6,323 6,1 0

Europe and Central Asia I 7,954 8,001 7,276 7,191 4,372 4,576 5,675 4,200Latin America and the Caribbean 9,234 9,872 9,824 10,209 10,334 11,678 1 1.939 14,145

Mddle East and North Africa 619 611 618 639 2,027 1,841 1,976 1,555South Asia 3,067 3,408 3,523 3,662 486 1,353 1.000 1,247

Sub-SaharanAfrca 1,136 939 912 873 1,106 1.2 3 ,322 1.198

Severely indebted middle-income 7,439 7,797 7,939 8,373 6.725 8,209 8,865 10,474Argentina 3,469 3,555 3,645 3,552 1,425 1,622 1,732 1,797

Bolivia 8 - - - - -

Brazil 1 1,675 2,115 2,098 2,290 2,772 3,139 3,376 4,1 66Bulgaria 341 337 321 312 - - -

Gabon - - - - - -

Ecuador 164 76 74 105 360 391 264 319Jamaica - - - -

Jordan - - - - - - -Mexico 11,622 1,449 1,527 1,524 1,704 2,058 2,584 3,6I7

Panama _ - - - 465 779 909 573Peru 61 264 275 592 - 220 - -

Syrian Arab Republic - - - - - -

Severely indebted low-income j 722 538 499 463

Moderately indebted low-income, - - - - 1,270 907 1,048 856

Moderately indebted middle-income 9,059 8,904 8,431 8,343 9,224 9,939 1 ,596 10,691

Selectedcountries,, 4.085 3,857 3,864 3,783 9,349 12,333 3,910 13,375Chile 355 391 340 323 625 667 653 810

China - - - - 582 1.221 1,147 138Colombia 412 429 474 472 613 749 765 706

Cote d'lvoire 12 IS 15 15 - -

Egypt - - - -

Hungary 213 264 241 237 - 354 457Indi - - - 971 472 537

Indonesia 1- - - -, 768 2,353 3,265 3,584Malaysia - - - 282 475 474 476

Morocco 298 274 275 271 -

Nigeria 710 522 484 448 - - -

Philippines 52 33 50 54 315 439 532 846Thailand _ - _ - 580 67 907 1,065

Turkey - - _ - 1,308 1,373 1,537 -

Uruguay 263 296 296 297 659 757 697 699Venezuela j 709 753 732 710 831 787 771 762

Offshore banking centers 21,483 20,592 19,864 20.258 11,289 14,706 17,492 20,202

Oil exporters 12,716 12,364 1 1,698 1 1,558 3,237 2,357 2,588 2,447DRS reporters 7,431 7,25 6,791 6,691 2,834 2,052 1,997 1,929

DRS reporters 1 1,734 1 1,933 11,987 2,310 16,605 21,204 23.721 24,433

(table continues on next page)

February 1997 1


-A3U-A.6 Commercial bank claims on developing countries, by country of origin (continued)US$ millions

Switzer/end United lingdom'

County grup o, couty 992 /993 994 1 995 1991 1992 .993Q4 994Q4

All developing countries 22.994 24,79 27,795 28, 87 44 653 43,862 5. ,0 9 54.857East Asia and the Pac.fic I.829 2,93 3,048 4,363 4, 14 4,239 7,8 9 9 7 8

Europe and Central Asia 5,569 5,549 5,145 5,076 9.736 9,355 10,043 10,845LatinAmercaandthe Carbbean 9,498 0,231 2,817 12,041 17,527 i8061 21,365 21,302

Mddle East and North Afrca 3,164 3, 36 3,293 3.323 4,203 3,425 4,205 5,209SouthAsa 718 975 019 1,485 1,698 8 4 1 775 2,297

Sub-SaharanAfrica 2,215 1,969 2,474 1,899 6,766 6,832 5.766 5,486

Severely indebted middle-income 1,049 1 ,388 13,883 12,665 5,633 15,772 18.8 3 19,023Argentina / ,604 1,365 1,82 2,970 2,738 2,797 3,088 3,883

Bo ivia j 6 25 43 47 6 17 49 59Brazil 2,821 3,023 2,232 2,C88 4 04 4 274 5,572 S, D00

Bulgarna 248 264 75 40 233 1 91 231 89Gabon 8 7 10 .0 7 47 30

Ecuador 132 i45 l63 116 514 471 474 483Jamaica 1 8 2 2 18 7 76 68 95Jordan 06 82 96 110 357 270 302 282Mexco 2,369 2,860 5,2 3,199 5,611 5,943 7,0 2 6895

Panama 3,295 3,222 3,749 3,252 061 1,148 1,4 9 ,671Peru 172 151 203 535 342 226 302 277

Syrian Arab Repub c 19 21 33 34 58 42 3 i

Severely indebted low-income 1 2,006 ,733 738 553 2,968 2,486 2,388 2,480

Moderately indebted low-income 1,081 1,077 578 2,139 2,123 1.898 2,326

Moderately indebted middle-income 7,033 7,379 7,6 2 8,013 .5,607 15,33 16,906 17 423

Selected countries' 8,9 7 10,66 13,184 i 2 924 8,J46 8,050 23,398 24,715Chile 624 690 1,066 1,073 704 582 729 920C nra 495 337 680 .060 ,031 942 2,369 3,223

Colombia / 29 374 561 625 6 3 647 810 1,028C6teo'ivoire / 100 99 H5 84 155 162 123 172

Egypt 383 339 287 317 594 430 726 796Hungary 63 77 88 78 299 268 226 365

India 4 7 63. 538 971 1 64 1,207 162 507Indonesa 3i7 593 742 1 28 .231 1,253 2,03 2,467Malaysla 150 509 295 313 605 689 1,094 h.H I

Morocco 13 17 41 92 35 368 263 272N geria 1 200 109 68 55 702 477 375 239

Philippines 12 165 38 403 717 761 885 702Thailand 633 i,010 164 1,447 424 485 ,3 0 2,014

Turkey / 1,617 , 534 , 293 1,295 1,134 1,053 658 1,100Uruguay 06 218 242 180 85 227 251 333

Venezuea 839 844 629 641 2,241 2,466 2,476 .746

Offshore banking centers 18,826 21,244 21,138 24,376 25 943 24,063 47,343 5 .506

Oil exporters 5,29 4,398 4 586 4,826 10,096 9,793 0,16 9,563DRS reporters 2,942 2, 1 57 ,970 2,002 7,86 . 7 705 6,919 4,902

DRS reporters 23,264 26, 89 29 295 30,825 36,183 35,850 43,765 48,532

' Financial Flows and the Developing Countries


?ABLEAE Commercial bank claims on developing countries, by country of origin (continued)US$ miluons

United Stctesc

Country group or countpy i 995 1 996Q1 1 996Q2 i 996Q3

All developing countries 90,378 93 018 97,646 03,479East Asia and the Pacific 13,507 13,953 16,042 17,076

Europe arc Central As.a 8,626 9,266 0,239 12,181Labn America and the Caribbean 60 920 62,086 63,21 1 66,668

M ddle East and North Afr ca 2,782 3,030 3,327 3,001South Asia 2,277 2,363 2 336 2,182

Sub-Saharan Africa 2,266 2.320 2,491 2,371

Severely indebted middle-income 46,898 47,688 48,744 50,197Argentna 1 1,3 1 1,309 1,893 13,377

Boiva 140 156 178 210Brazil 14,802 16,283 16,380 16,043

Bulgaria 73 1 8 82 45Gabon 6 5 5 4

Ecuador 770 903 940 1,073Jamaica 137 148 146 153Jordan 60 34 54 32Mexico 18,374 17,503 17,363 7220

Panamiia I 573 541 631 857Peru 604 640 934 1,135

Syrian Arab Republic ! - - 90

Severely indebted low-income 953 1 060 1,001 887

Moderately indebted low-income 1,975 2,004 1,941 2,025

Moderately indebted middle-income 25478 26,216 27,327 30,387

Selected countriesb T 47,177 46.846 48.513 50,583Chi e 4,307 4,051 3,958 3,857China 1,732 1 973 2,269 2,418

Colonmba 3,173 3,117 3,090 3.4 4Cote d mvoire 29 24 43 38

Egypt H7 129 177 164Hungary 411 533 486 590

India 1,615 1.542 !.425 1,506Indonesia 2,909 3,316 3 693 3,684

Malaysia 1,536 1,395 1,903 2,388Morocco 47 502 440 424

Niger a 287 299 258 62P'hnippnes 3,0 8 2,633 3,423 3,541

Thailand 4,312 4.636 4.754 5,045Turkey 1,504 1.539 .848 2,126

Uruguay 1 1,21 1 1,297 1,403 ,422Vene-uea 3,12 3,382 3,055 3,660

Offshore banking centers 3 .485 28,848 30,736 30,433

Oil exporters 7 708 8,134 8.161 9,652DRS reporters 5,405 5.718 5,350 7,242

DRS reporters 89,750 92,709 97,241 100.578

Not available.Note Ths tabe shows the latest available data from each major creditor country. See country classfications atthe end ofthis statistca appendixa. Partly corso dated aggregate claims of banks and the r worldwide operat ors.b. Most of these countries are also inc uded n the ndeotec courtry groups.c. Conso idated clairs of nanks and thei' wor dwide operabons.Source. Deutsche Bundesbank, Zoh1urgsbilcnzstcstjsik: Banca d'Ita a. Bolietino Econormco: De Nederandsche Bank Quorerly Bulietin, 3anque Nationae Suisse, Ees Bonques Su,sses; Bank ofEng and, Stoosscr Abstroct, Porn i, Federal F.nanc al nstitutions Exam nat oc Counci. U S Country Exposure Lending Survey.

Feberuay 1997


TABLE 7 Maturities of bank claims on developing countriesUS$ millions

i 996Q2

More thenLess then I yeareor d less More thin Estimeted Short term

Country group or country 1995 Totb I yeor then 2 yeors 2 yeers Unelocated short temnm (% of toto!)

All developing countries 679,447 708,615 378,275 49,439 229,948 50,953 330,275 47EastAsiaandthe Pacfic 183,381 203,009 1 19,865 13,206 57,910 12,028 107,963 53

Europe and Centra Asia 175,551 80,354 86,064 16,1 35 62,353 15,802 70,353 39LatinAmericaandtheCaribbean 213,558 221 532 17,291 12,869 72286 19,086 104943 47

Middle East and North Africa i 52,245 49,740 24,961 4,051 9,985 743 20,295 4South Asia 22,074 23, 89 1,692 1,308 8,584 1,605 1 0.349 45

Sub-Saharan Africa . 32,638 30,79 1 8,402 [,870 8,830 1,689 16,372 53

Severely indebted middle-income 204,876 21 1,654 109, 95 11 3,77 72,626 8,456 97,892 46Argentina 39,181 39,475 2;.047 2,543 12,050 3,835 18,829 48

Bol via 399 451 322 4 64 6 1 317 70Brazil ,1 57,391 63,359 36,469 3,027 17,554 6,309 33 053 52

Bulgaria 3,007 2,679 554 1 87 1,457 481 292 I

Gabon 1 640 558 322 73 57 6 247 44Ecuador 2,780 3,091 1,483 68 ,307 233 1[406 45Jamaica 644 758 281 3:2 220 225 23 30

eordan i .138 981 528 97 252 104 471 48Mexico 57,331 37,065 27,240 3,59'0 20,485 5,750 23,837 42Panama [ 27,723 27,246 11,860 1,423 1 2,705 1.258 10,453 38

Peru o 5,6 7 7,065 5,534 267 ,J44 120 5 340 76Syrian Arab Republc 47 572 345 218 9 342 60

Severely indebted low-income 27,3 15 26,636 j3,C72 ,751 10,956 857 1 079 42

Moderately indebted low-income 22,093 23,031 1 1.867 .317 8,483 1,364 10,518 46

Moderately indebted middle-income 238,096 247,855 119,443 22,493 90,965 4,954 97,986 40

Selected countries'[ 339,873 358,605 91,078 25,233 1 8,15 1 24,143 167 26 47Ch ae 13,616 13,507 7,79 848 4,658 2 0 6,731 50

China 48,399 50,649 24,527 4,148 17,780 4,194 20,926 41Coombia [0,940 12,06 3 531 ,[83 5,026 32 4,775 40

Cote d'lvo re, 993 1,878 .708 30 136 4 1,663 89Egypt 3.487 3,236 2,077 264 872 23 1,734 54

Hungary . 9,104 8,456 2,955 602 3,293 .,606 2,201 26Inda 15,446 5,723 7,132 1,050 6,271 270 6038 38

Indonesia 44,843 49.624 29,922 3,471 14, 68 2,063 26,765 54Malaysia 6,759 20,070 9,910 833 6,843 2,484 8,763 44

Morocco 4,654 4,426 2,075 305 2,043 2 735 39Nigeria 2,826 2,537 .089 22.5 1,129 94 726 29

PhFippnes 8.325 10,79 5 943 531 3,710 607 5,598 52Thaland [ 62,994 69,675 48,064 4,083 14,926 2,602 44,528 64

Turkey 18,623 20 21 10,1 8 2,027 6740 1 236 8, 57 4Uruguay 3,748 4,053 2,885 1013 003 57 2 814 69

Venezuela 11,940 10.894 2,492 894 6 06 1,402 ,743 16

Offshore banking centers 658,672 615,345 477,742 7 826 87,723 32,054 46 ,5 0 75

Oil exporters 129,669 26,907 59.899 9.484 54,156 3,368 48,559 38DRSreporters 102,506 99,180 41.741 8,9:4 45,444 3081 31,057 31

DRS reporters 662,234 699,488 391,500 42,685 212,016 53.287 350,738 50

Note: See cou ntry class fications at the end of this statistica append x.a. Most of these countres are also ncluGed in she indebted country groups.Source: Bank for Internatonal Settements, The Mcturiy and Sectoroa Distribution of /nternmtonol BGnk Lending.



-B F A Funds raised on international capital marketsU5$ mili/ons

Country group or country 1992 1993 994 1995 995Q1 995Q2 1995Q3 1995Q4 1996Q1 1996Q2

All developing countries 36,358 70,539 68,173 81,644 3624 19924 26,358 21,738 35,391 30,.41Bonds 19. 54 51,374 43,853 44,&17 3,149 11,068 16,698 13,903 30,271 22,1 15

International 13.302 37,174 33,668 29,169 1,965 8,556 10,354 8,294 24,983 14,874Foreign 1 5,852 14,200 10,185 15,648 1,183 2,512 6,343 5.609 5,288 7,241

Loans | 7.204 9,165 24,320 36,827 10,475 8.856 9,660 7,835 5,120 8,026International 17,033 18,968 24,225 36,827 10,475 8,856 9,660 7,835 5.092 7,806

Fore gn 170 197 95 - - - - - 28 220EastAsiaand the Paafic 10,693 18.894 27,1 26 25,452 4,857 4,532 9026 7,037 5,973 6,635

Europe and Central Asa i 9,642 20,264 1 3,632 19008 4,7 8 6,097 4,079 4,1 5 16,6 1 8 6,063LatnAAmercandthe Caribbean | 9 518 27,338 20,438 24,788 995 6.189 8,985 8,619 1 1 275 13,283

Middle East and North Afrca 3,070 337 102 1,51 1 284 268 202 758South Asia 20 567 ,656 2,954 1,053 488 1,063 350 413 1,324

Sub-SaharanAfrica 1,273 102 1,864 3,674 906 948 1,214 606 81a I 992

Severely indebted middle-income 7 913 22,674 1 8,363 20,835 700 5,852 7,914 6 369 9,378 1,450Algeria , __ - - - -- -

Angola 325 12 - 124 - - 124 - 30 -

Argentina j 1,529 6,473 5,716 6,983 405 .5 2 2, 90 2,876 3.443 3,233Bolis'ia _ - I0 _ - - - -

Braz, 3,0 0 6449 4,011 6,635 158 3,114 1,437 1.927 2,325 3,384Bulgaral - - - - - - -

Ecuador - - 0 - - - 10 -

Gabon - - _ - - -'jamaca - - - - -

jordan - - 50 - - 50 - -

Mexico 3,374 9.751 8,526 6,957 137 1,077 4, 87 1,556 3,610 4,833Panama - - i50 - 150 - -

Peru - - 100 50 - - 50 - -

Po and 9 - 3 549 - 299 250 - - i50Syrian Areb Republic -- -

Severely indebted low-income 441 84 557 563 10 235 158 160 560

Moderately indebted low-income 316 657 1,656 2,954 h,053 488 1,063 350 4.3 1.324

Moderately indebted middle-income 13,334 25,207 19,209 26,930 3,483 7,431 7,295 8,720 9,861 8.131

Selected countriesa 21.659 44.280 4 1,945 45,81 1 6,1 85 8,991 1 7,648 12.987 1 2,628 6,478Chile 350 775 80 .,448 245 377 451 375 1,132 703

China 1 4,043 6,756 8,097 6,258 1,582 553 2265 1,858 1,200 1,838Colombia | 621 172 2,082 50 H0 393 1,529 745 1,040

Cote d'ivoire Egypt - - 18 58 - - 58 - -

Hungary .446 5.071 2,541 3,771 252 1,788 1 036 695 145 501lnd.a i 201 475 1,461 2.263 644 303 966 350 413 892

Indonesa 2,641 3,726 6,199 7588 .440 2, 35 1,895 2,119 2,401 2.508Maaysia 1,271 1,61 3.526 3,205 - 250 2,252 703 300 667

Morocco 60 - - 25 25 - -

N;geria - - - - - _ - - -Philippines i,250 i,1 64 .272 - 340 333 599 147 945

Thai and 2,718 5,550 7,9 0 6,634 1.836 I 254 2,246 1,298 1,925 677Turkey 4,580 5,763 851 3,929 - 805 1,623 1,50 590 ,784

Uruguay 120 140 203 206 - 206 - - -

Venezuela 1,035 2,93 400 346 - - 346 20 90

Offshore banking centers 2.058 9.476 8,574 4,939 85 1,582 1 153 1,354 1,622 1,380

Oil exporters | 4,445 3,503 2,8 7 3,949 68 715 1 420 1,646 650 150DRS reporters 1,460 3,157 .498 1,566 140 .080 346 405 90

OECD countries i 392,920 510,550 498,21i1 723,203 53,078 195,135 76,669 198 321 219,954 224,340Multiateral nstitutions 20,874 20,71 12,373 17,674 2,257 5,291 5,870 4.257 5,802 5,743

Other .961 3.037 2,353 4,257 812 1,403 1,789 253 30 844

Totalb i 458275 619,986 598,005 844,596 173.J06 225. 30 2i4,952 231,409 267,566 267.702

-Not available.Note: See country c assif caliors at t5-e end of this statist,cal apperddia.a Most of these countr es are also ncluded in te indebted country groups.b. Inc udes al de\eeoping countres, offshore barking centers, OECD countries, nultlateral insttutions, ana the category other.Source OSCD, F,rnnc,oa Stotsicts Mzonthiy, P0t 1.

Febiruag 1997


A 9 Secondary market debt (bid) pricesPercentage offace va,'ue I

Country group or country 1 994Q2 1994Q3 994Q4 995Q ! 995Q2 ! 995Q3 ! 995Q4 I 996Q ! 996Q2 996Q3 ! 996Q4

Severely indebted middle-incomeAngola 1 20 18 15 - - 17 16 19 18 22 25

Argent nal 50 51 41 40 48 47 56 52 55 55 60Brazilb 41 44 40 36 45 48 52 S l 53 57 61

Bulgaria 25 45 45 42 50 5 53 50 52 5 53Cameroon 16 !7 10 - - 13 14 [6 16 16 8

Congo 13 3 11 - - 13 12 15 16 18 22Ecuador' 40 33 29 27 48 49 50 54 36 37 44Jamaica 83 83 83 - 82 -- - 76 74 77 81Jordan 47 48 42 33 39 44 47 54 53 57 58

Morocco 72 72 66 58 58 63 67 69 72 76 81Panama 49 59 53 - 53 59 45 48 48 51

Peru 48 60 56 51 61 68 7Poland 35 37 33 31 43 43 47 49 50 51 55

Uruguay - - - - - __ - - -

Other selected countriesAlbania 12 6 16 16 18 21 22 14 3 2 3Ageda ! 43 46 30 28 28 - 46 55 - 61

Chile! 95 95 95 - - - - - -

Costa Rica' 66 66 66 - 51 52 54 60 59 67 75CdtedIvoire 18 19 !8 .5 '5 16 16 20 19 19 26

EgyDt 46 47 48 48 48 48 48 49 47 - 47Honduras 39 36 36 - 27 - 35 38 40

Mexicoe 63 66 53 47 60 6( 64 64 66 67 7Nicaraguaj 8 8 6 - 5 -- 8 9 7 [0 12

Nigera 1 40 39 39 37 43 44 48 52 53 56 63Phil Appres' 63 65 59 59 73 74 74 79 80 81 87

Russian Federationg - 39 28 22 32 33 34 34 42 62 76VenezueFaej 49 49 45 43 50 5! 59 56 60 65 79

-Not availab e.a. Guaranteed Refinarcing Agreement (GRA). Prices after March 1993 refer te oar bonds offered under the Brady initative.b. Mul[i-Year Deposit Fac ity Agreement (MYDFA). Prices after April 1994 refer to par bonds offered unde, the Brady nitiative.c. Mu[t -Year Ref nanc ng Agreement (MYRA).d. Pr ces refer to Series A par bonds offered u-der 'he Brady ntiat vee. Prces referto pa- bonds o-ered underthe Brady ritativef. Publ c sector restructured debt, ncluding Centra Bank oftre Phil ipnes. Prices refer to restructured oans offerea undetotre Brady nitiative.g.These a-e non-performing loans of the Russian Vnesheconambark.Source: Salomor Bronhers; Euroseek Eimerging Mcrket Debt Reporu irtemctirncn Fincncig Reiiew; ard World Bank data.

* Financial Flows and the Developing Countries


Emerging stock marketsMarket ccpitalizotion VoVe of stock traded Price-eernings rotio

(US$ miilhons) (US$ millions) (percent)

Economy 1996Q2 1996Q3 1996Q4 1996Q2 996Q3 1996Q2 i996Q3 1996Q4

Argentina 44, 08 40,574 47,748 1,183 896 20.4 28.7 38.2Brazi 1 91,287 93,911 203,716 26,584 32,381 30.1 21.3 14.5

Europe and Centra As a 85,590 87,044 90.975 12,630 10,404 81.5 70.8 71.1Chile 72,713 70,253 68,236 2, 46 1,894 16.3 16.1 14.6

China 72,473 85.990 70,787 40,637 70,735 12.7 12.8 27.8

Coombia 14,981 5,660 16,697 366 392 9.5 10.2 10.4Greece 23.717 24,733 23,990 1.498 1,902 9.4 9.9 10.5

Hungary 4,239 4,631 4.815 334 390 35.5 20.4 17.5India 150,671 133,746 119,233 8,061 8.053 6.8 13.5 12.3

Indonesia 79,216 79801 87, 68 7,539 7,501 22.4 20.2 21.6

Jordan 4.209 4,383 4,509 64 72 12.9 14.0 18.7Malaysia' 271,290 281,269 307,284 42, 37 37,727 27.7 26.4 27.

Mexico I 110,700 13.670 103.138 13,617 8.628 10.0 15.5 16.8Nigeria 2,665 3,170 3,384 15 .0 .0 .0 10.1

Pakstan 10,608 1 1.538 1,419 1,738 1,069 5.0 12.2 11.7

Peru 1 .3.653 5,170 13,864 844 1,020 17.4 19.5 14.2PhOlippines 79,970 77,852 79.545 7,308 5,939 35.6 23.0 20.0

Poland 8,014 8,644 8,140 1,374 1.220 1 1.4 14.0 14.3Portugal 20,653 21 359 22,936 1,374 ,490 15.4 15.9 18.1

South Africa 270,903 252,514 245,693 1,409 6,169 [8.9 18.7 16.3

Sri Lanka 1,777 1,739 1,848 21 19 11.3 11.7 9.7Taiwan(Chnna) 232,878 235,069 264.080 167,171 103,278 26.9 26.6 28.2

Turkey 28,967 27,677 3 .094 8,050 5.402 9.8 10.6 10.7Venezuela 5,343 6.869 9,144 242 278 33.7 37.7 32.5Zimbabwe 2547 3,044 - 47 47 13.0 15.5 12.9

Not ava lable.a. Data for Malays an-incorportated comcanies only.Source: Irternationa Finance Corporation, Energing Stock Markets Factbcok.

Fe ay 1997


Country groupsEast Asia and the Pacific Georgia* Costa Rica' Jordan' Gabon*American Samoa Gibraltar** Cuba** Iibya** Gambea, The'Cambodia* Greece** Dominica' Morocco0 Ghana'China* Hungary' Domin can Repuboic' Oman0 Guinea*Fji. Isle of Man Ecuador* Saudi Arabia-0 Gu nea-Bissau*Guam Kazakstan* El Savacor Syrian Arab Republic' Kenya*Indonesa* Kyrgyz Repubic French Guana Thn sia* Lesotho*K.ribati** Latvia* Grenada* Y emen* Madagascar*Korea, D.P.R. of* Lithuania* Guadeoupe Malawi'Lao P.D.R.* Macedonia, FYR of' Guatemala* South Asia Mali*Malaysia* Mata* Guyana' Afgharistan** Mauritania'Marshall Islands Moaova* Het Bangladesh* MauritiustMicronesia Poland* Honduras' Bhutani MayotteMongolia* Portugal* Jama ca* Itd a' Mozambique*Myanmar* Romania' Martinique avesp Namibia**New Caledonia0 Russian Federation* Mexico* Nepal* Niger*Papua New Guinea* Slovak Republic* Nicaragua' Fakostan* Nigeria'Phrlippines* Siovenia* Paraguay* Sranka ReunionSolomon Islands* Taj Kistan* Peru' Sub-Saharan Africa Rwanda*Thailand* Turkey* Puerto Rico Angola* Sao Tome arc Pr ncipe*Tonga* Turkmenistan* St. Kits and Nevis' Benrn* Senegal*Vietnam* Ukraine* St. Lucia* Botswanae Seycnel.es*Western Samoa' Uzbekistan* St. Voncent* Burkina Faso* Sierra Leone'

Europe and Latin America and STriname** Buroud* Somau a*Central Asia the Caribbean Uruguay' Cape Vero* Sudn*Albania* Antgua and Barbuda** Venezue.a* Centre. Afrcan Repubic* Swaziland'Azerba an' Argentina** Chtad Tanzia"*

Belarus Aruba Middle East Cnaor TozaiBulgaria' Belize' and North Africa Comoros* TogoaCroatia Bolva* Algenae Congo* Uganda*Czecn Republic' Brazil' Egypt Arab Rep. of' Cte ob voire* Zamoa*Estonia* Chile* Irn, Islamic Rep. ofDFormer Yugoslavia* Co ombia* lrae

0 0Equatorial Guinea' Zimrabwe0

Etchopia'

Severely indebted Severely indebted low- Macagascar M1oderately indebted Co ombiamiddle-income income countries' Mali low-income countriesa Egypt, Arab Rep. ofcountries' Angola Maurtania Burk.na Faso Greece**Argentina Afghanistan* Mozambique Bangladesh HungaryBolivia Burundi Myanmar Bcrin IndonesiaBrazil Camboda Nicaragua Clad Macedonia, FYR ofBulgaria Cameroon Niger Comoros MoroccoCuba** Central Afican Repuboic Nigera Gambia, Toe Papua New GuineaEcuador Congo Rwanda Hait Phi ipp:nesGaoon CBte dclvoire Sae Tome and Principe cnoia PolandIraq** Equatorial Guinea Sierra Leone Lao P.D.R. St. VncentJamaica Etniopia Somalia Pakistan Russian FederationJordan Ghana Sudan Senega Trinidad and TobagoMexico Guinea Tanzania Zmiroabwe TunisiaPanama Gu nea-Bissau Togo TurkeyPeru Guyana Uganda Moderately indebted UruguaySyrian Arab Republic Honduras Vietnam middle-income Venezuela

Kenya Yemen countries' Western SamoaL beria Za re AlgeriaMalaw Zamba Crile

Offshore banking Caymac Is ends Singapore Brunei Nigeria`centers0 Hong Kong Vanuatu' Ccngo* Oman'Baramas Lebanon* For-mer Soviet Union* QatarBahrain** L:beria* Oil exporters Gabon' Saudi A-ab a*Barbados* Macao Agena" Iraru, Is.amic Rep of' Trinidad and Tobago'Bermuda Nether ands Anti! es Ango a* Iraq** United Arab Emirates

Panama Bahrain** Libya** Venezuea*

DRS reponter. \Jeon-DRS economy. The remain ng countres ncluce selected h gy-income and non-OECD midd e-income countries. The Debtor Reporting System (DRS), set up in195 i to mon ror statistics on the extemal debt of developing countr es, is mainta ned by the staff ofthe Internationa Development Data Group ofthe Wor d Bank s InternaJona Economics

Department. The World Bank .s the sole repository for these statistics on a oanb-y- oan basis.Noter Country group compositon has been mod fed to refectthe annual updating efGNP per capta and related des- incicators.a. All countries n the group are DRS reporters, excest those for which t is ctnrwise indIcatedb. Offshore banking ce-ters are not ncluded in any other country groUD except for oi exsorters.

D Financial Flows and the Developing Countries

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