Developing Foreign Bond Markets: The Arirang Bond Experience in Korea
32 Pages Posted: 12 Aug 2006
Date Written: May 2006
Abstract
This study investigates the development of Korea's foreign bond (Arirang) market for won-denominated foreign bonds. We provide an institutional perspective and discuss the problems, concerns and key issues related to the development of this market. We find no evidence that Arirang issuance either crowded out local debt or had exchange rate implications. Overall, the Korean experience provides valuable lessons for other emerging nations seeking to build bond markets for local and foreign issuers. Instigating market development demands an enabling infrastructure, the nurturing of local and international demand and the deregulation of capital flows. This process is demanding, as the sophistication of the local bond market does not make it appealing to foreign borrowers per se.
Keywords: Arirang bonds, foreign bonds, bond market development
JEL Classification: F34, G18
Suggested Citation: Suggested Citation
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