IT GLOBALISATION

IT globalisation international economics issues

IT Globalisation International Economics Issues

Introduction

This paper analyses and recommend on whether the bank should respond positively to the proposal surrounding the decision process relating to sovereign international bond issuance. Over the last decade, a growing number of EM and LIC sovereigns entered the international capital markets for the first time Greece Improved domestic macroeconomic conditions, including debt sustainability, enhancements in debt management frameworks, ample international financial liquidity and strong investor appetite for new asset classes and higher-risk instruments, have allowed many debut sovereign bond issuers to access international financial markets with increasingly higher sizes and relatively lower coupon rates (Klassen, 2004).

The proceeds of these bonds have been used for a variety of purposes, including funding of infrastructure development projects Greece easing budget financing pressures (Ecuador and Egypt), and financing in part the country's repayment of existing debt. The main benefit of international bond issuance is the augmentation of domestic savings.

When a bond issuance is undertaken in the context of a sustainable debt framework, it can significantly enhance a country's available resources and, hence, its prospects of sustainable growth and prosperity. Other benefits include: (i) the additional incentive to increase macroeconomic discipline and move forward with structural reforms as a result of the intense scrutiny of the domestic economy by international market participants; (ii) establishment of the sovereign's presence in the international capital markets, which could also allow local corporates to access international markets in the future; and (iii) substantial broadening of the country's investor base (Agenor, 2001; Dittmar and Yuan, 2007).

"Indeed, a successful correction of its very excessive deficit is not only important for Greece but for the euro area and the EU as a whole," Barroso said. The Commission's much-anticipated recommendations on what Greece should do are likely to be in line with what Athens has promised in its long-term austerity plan, which forecasts a gap of 2.8% in 2012, down from 12.7% in 2009. The Commission, the EU's executive arm, will formally present its recommendations on Wednesday and they will then be sent for the approval of EU finance ministers on 15-16 February.

Warnings can be issued to countries whose economic policies are not consistent with EU guidelines, or countries which risk jeopardising the proper functioning of the euro zone. The Commission will launch infringement proceedings against Greece for sending false statistics and later also demand auditing powers for the EU statistics office Eurostat to be able to check the accuracy of such data in the future.

Prospective Credit Worthiness

Market watchers interpreted that to mean order books could open on Monday or Tuesday on a five-year bond maturing on Aug. 20, 2015. "It is very likely to be Monday," said Wilson Chin, a bond analyst at ING in Amsterdam. There is some 16.25 billion euros of paper scheduled for auction this week and modest cash flow of 700 million euros in coupon payments to investors. But the market is still supported by the copious liquidity offered by the European Central Bank since ...