The Development of Domestic Bond Markets

Abstract

This paper deploys a risk-based approach to analyse the development of the government bond market in Mexico. This paper determines that the development of a market for local-currency government bonds has allowed the Mexican government to significantly enhance its debt profile by reducing and rebalancing the risk factors that contributed to previous crises, containing the possibility of future crises and slashing its debt costs. While this process of bond market development requires the government to develop the institutions that support the market, other factors such as the size of the economy and global market conditions also shape the process.

About the Author

Milan Patel is an independent consultant with experience in fixed income analytics, securities data management, and researching bond market development. He also serves as Technology Officer for D2Development Fund, an organisation that provides funding for startup projects in the developing world that are proposed by students of the Development Studies Institute at the London School of Economics.