Gpd-Linked Bonds as a Financing Tool for Developing Countries and Emerging Markets

62 Pages Posted: 15 Oct 2004 Last revised: 15 Aug 2008

See all articles by Michael Schröder

Michael Schröder

ZEW – Leibniz Centre for European Economic Research - International Finance and Financial Management

Susanne Kruse

Karlsruhe University of Applied Sciences

Friedrich Heinemann

ZEW – Leibniz Centre for European Economic Research; University of Heidelberg - Alfred Weber Institute for Economics

Matthias Meitner

Allianz SE

Date Written: 2004

Abstract

The paper examines the applicability of GDP-linked bonds for the financing of developing countries and emerging markets. GDP-linked bonds are bonds of which the coupon and/or redemption payments are tied to the GDP of the issuing country. The study encompasses a detailed empirical analysis of their pricing behaviour, the pricing sensitivities to changes in GDP, and of their behaviour in a portfolio context is conducted. A survey amongst potential investors as well as issuing-side capital market participants assesses the prospects of success of this new type of bond. Finally, the usefulness of a partial public guarantee of payments is examined. The paper provides evidence under which circumstances, for which investors and for which countries GDP-linked bonds might be an appropriate investment vehicle.

Keywords: GDP-linked bonds, bonds, development finance, public finance

JEL Classification: H81, G18, O19

Suggested Citation

Schröder, Michael and Kruse, Susanne and Heinemann, Friedrich and Meitner, Matthias, Gpd-Linked Bonds as a Financing Tool for Developing Countries and Emerging Markets (2004). ZEW - Centre for European Economic Research Discussion Paper No. 04-064, Available at SSRN: https://ssrn.com/abstract=604444 or http://dx.doi.org/10.2139/ssrn.604444

Michael Schröder (Contact Author)

ZEW – Leibniz Centre for European Economic Research - International Finance and Financial Management ( email )

L 7,1
P.O. Box 10 34 43
D-68034 Mannheim
Germany
+49 621 1235 368 (Phone)
+49 621 1235 223 (Fax)

HOME PAGE: http://www.zew.de/en/team/msc/?cHash=c9507802336d8f7db96848c539ed2f89

Susanne Kruse

Karlsruhe University of Applied Sciences ( email )

Karlsruhe
Germany

Friedrich Heinemann

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

HOME PAGE: http://www.zew.de

University of Heidelberg - Alfred Weber Institute for Economics ( email )

Grabengasse 14
Heidelberg, D-69117
Germany

Matthias Meitner

Allianz SE ( email )

Königinstrasse 28
Munich, 80802
Germany

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