Eduardo Levy Yeyati UTDT Business School

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Sovereign Debt in LAC
Eduardo Levy YeyatiUTDT Business School IDB
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Three degrees of vulnerability

• DSA Size (stock cost)
• Debt ratios
• V_at_R Volatility (indexation)
• Currency (dollars, pesos CPI)
• Liquidity (effective duration)
• Location (domestic external)
• Creditor (private official)

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Debt ratios are growing...
Sample Argentina, Belize, Bolivia, Brazil,
Chile, Costa Rica, Ecuador, Guatemala, Honduras,
Jamaica, Mexico, Nicaragua, Panama, Paraguay,
Trinidad Tobago, Uruguay.
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...with a different composition
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Borrowing at home...
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...mostly in local currency...
Sample Argentina, Brazil, Honduras, Nicaragua,
Panama, Uruguay, Venezuela
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...with the help of institutional investors
Private Pension Funds Holdings of Market
Instrument Debt, in percent
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External debt...
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...is still predominantly official...
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...with IFIs gaining in importance...
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...as concessional bilateral lending makes a bow
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Within private sources...
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...bonded debt is replacing bank debt...
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...only in EMs
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Similarly, for domestic debt...
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...
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Debt ratios looks different in net terms
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How do these data compare with availables sources?
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Main divergence EMs
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Three degrees of vulnerability

• Size ? Debt ratios are growing (cost?)
• Volatility ? Slow de-dollarization
• Based on domestic demand (with the help of
  CPI-indexacion pension funds)
• Liquidity ? Domestic bias
• Is domestic debt more flexible?
• Still too much official debt?

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Sovereign Debt in LAC
Eduardo Levy YeyatiUTDT Business School IDB