As part of the Brown Bag Lunch series, the International Economics Department at the Graduate Institute is pleased to invite you to a public talk given by Guilherme Suedekum, PhD Candidate in International Economics.

Foreign Investors and Nonlinearities on the Impact of Global Financial Conditions on EME Local Currency Bonds

by Guilherme Suedekum

Abstract: Sovereigns in emerging market economies (EME) are increasingly relying on bonds issued in local currency (LC) while foreign investors have become more active participants in markets for such bonds. In this paper, I use monthly data for 14 EMEs over the 2010-2019 period to explore nonlinearities on the impact of global financial conditions on EME LC sovereign bond markets caused by foreign investors. In line with the Original Sin Redux literature, my preliminary findings suggest that a higher foreign participation in these markets increases the impact that global financial conditions have on spreads and credit risk premia of EME LC sovereign bonds.