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IMF Working Paper

Strategy, Policy and Review Department

Determinants of and Prospects for Market Access in Frontier Economies

Victor Hugo C. Alexandrino da Silva, Luiza Antoun de Almeida and Diva Singh1

Authorized for distribution by Bikas Joshi

May 2021

IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.


In recent years, we have observed an increase in low-income countries’ (LICs) access to international capital markets, especially after the Global Financial Crisis (GFC). This paper investigates what factors— country-specific macroeconomic fundamentals and/or external variables—have contributed to the surge in external bond issuance by these LICs, which we refer to in our paper as ‘frontier economies’. Using data on public and publicly guaranteed (PPG) external bond issuance, outstanding PPG bond stock, as well as sovereign spreads, we employ panel data analysis to examine factors related to the increase in issuance by these economies as well as the reduction in their spreads over time. Our empirical study shows that both country-specific fundamentals (such as public debt, current account balance, level of reserves, quality of institutions) and external variables (such as US growth and the VIX index) play a role in explaining the increased amount of issuance and the decline in spreads of frontier economies’ sovereign bonds. The impact of some of these variables on issuance appears to reflect a country’s need to issue bonds for external financing (’the supply side’ of bond issuance), while others appear to correlate more through their impact on investors’ appetite for a country’s debt (’the demand side’). In addition, the impact of country-specific variables can also be affected by external factors such as global risk appetite. Our analysis of key factors that have contributed to increased market access for frontier economies over the past decade provides important information to gauge the prospects for their continued market access, and for other LICs to join this group by tapping international markets for the first time.

JEL Classification Numbers: F34; G12; G15; O11.

Keywords: Sovereign bond issuance; Frontier markets; Market access; Bond spreads.

Authors’ email addresses:;;


  • Abstract

  • I. Introduction

  • II. Literature Review

  • III. Data

  • IV. Stylized Facts

  • V. Empirical Analysis

  • VI. Conclusion

  • References

  • Tables

  • 1. Frontier Economies

  • 2. Measures of Market Access

  • 3. Push and Pull Factors

  • 4. PPG bonds to GDP regressions

  • 5. Probability of Issuance regressions – Non-Linear Marginal Effects

  • 6. Probability of Issuance regressions.- LPM

  • 7. EMBIG regressions

  • 8. Factors Affecting Market Access in EE vs Frontier Economies

  • 9. Summary Statistics

  • Figures

  • 1. Outstanding PPG Bond Stock in Frontier Economies – 1990 to 2019

  • 2. Frequency of PPG Issuance by Frontier Economies

  • 3. Outstanding PPG Bond Stock vs VIX – 2009 to 2019

  • 4. EMBIG spreads evolution in Frontier Economies

  • 5. Number of issuances by year and country

  • 6. Percentage of Correct Predictions of PPG Issuance

  • 7. In-sample Probability of Issuance Predictions


Victor Hugo C. Alexandrino da Silva is a Ph D. Candidate at the Insper Institute of Education and Research. The authors are extremely grateful to Bikas Joshi and Daehaeng Kim for their guidance and fruitful discussions, and to Yudong Rao for excellent research assistance. The authors would also like to thank the participants of the SPR Seminar at the IMF for their helpful comments.

Determinants of and Prospects for Market Access in Frontier Economies
Author: Luiza Antoun de Almeida and Ms. Diva Singh