Author Description

Growth-indexed Bonds Have Been Suggested As A Way Of Reducing The Procyclicality Of Emerging-market Countries' Fiscal Policies And The Likelihood Of Costly Debt Crises. Investor Attitude Surveys Suggest That Pricing Difficulties Are Seen As A Considerable Obstacle. In An Effort To Reduce Such Concerns, This Article Presents A Simple Way Of Pricing Growth-indexed Bonds. As A Pleasant By-product, The Analysis Tracks The Quantitative Implications Of An Increase In The Share Of Growth-indexed Bonds In Total Debt, Measuring The Ensuing Decline In The Probability Of Default And The Reduction In The Spreads At Which Standard Bonds Can Be Issued. Contents; I. Introduction; Ii. Existing Debt Structures; Iii. Advantages Of Growth-indexed Bonds And Related Obstacles; Iv. Pricing Growth-indexed Bonds; V. Conclusions; References Paolo Mauro, Marcos Chamon. November 2005. Includes Bibliographical References. English