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The development of Colombian bond market

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  • Camila Aguilar
  • Mauricio Cárdenas Santa María
  • Marcela Meléndez A.
  • Natalia Salazar F.

Abstract

In this paper we explore the determinants and the consequences of the development of the corporate bond market in Colombia. We use a large firm-level dataset for the period 1997-2004 and find that the larger, more profitable and more leveraged firms have a higher probability to issue bonds. The econometric results also show that the larger the treasury bond market, the lower the probability that a firm will issue bonds, suggesting the presenceof a crowding out effect. On the demand side, the panel estimations indicate that investors with larger portfolios tend to hold more corporate bonds. Also, from the viewpoint of investors, average bond issue size is a critical variable. Finally, we find that sectors that have more corporate bonds (as percentage of total liabilities) have greater loan quality, and this result is stronger during periods of banking crises. We conclude that bond market development can play an important countercyclical role during periods of financial stress.Resumen: En este trabajo exploramos los determinantes y las consecuencias del desarrollo del mercado de bonos corporativos en Colombia. Utilizamos una muestra amplia con información por firma para el período 1997-2004 y encontramos que las firmas más grandes, rentables y apalancadas tienen una mayor probabilidad de emitir bonos. Los resultados econométricos también muestran que un mayor tamano del mercado de deuda pública tiene un efecto negativo sobre la probabilidad de las firmas de emitir bonos, lo cual sugiere un efecto de crowding out. Por el lado de la demanda, las estimaciones de panel indican que los inversionistas con portafolios grandes tienen mayor probabilidad de adquirir bonos. Así mismo, desde el punto de vista de los inversionistas, el tamano promedio de la emisión es una variable crítica. Finalmente, encontramos que los sectores económicos en donde la participación de los bonos dentro del total de pasivos es mayor, tienen una mejor calidad de la cartera y enfrentan con mayor fortaleza los períodos de crisis. Concluimos que el mercado de bonos puede tener un importante papel contra cíclico en períodos de stress financiero.

Suggested Citation

  • Camila Aguilar & Mauricio Cárdenas Santa María & Marcela Meléndez A. & Natalia Salazar F., 2007. "The development of Colombian bond market," Working Papers Series. Documentos de Trabajo 9195, Fedesarrollo.
    • Handle: RePEc:col:000123:009195
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    References listed on IDEAS

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    1. Burger, John D. & Warnock, Francis E., 2007. "Foreign participation in local currency bond markets," Review of Financial Economics, Elsevier, vol. 16(3), pages 291-304.
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    1. Velloso, Helvia & Núñez Reyes, Georgina, 2009. "El papel de la gobernanza corporativa en la recuperación y desarrollo de los mercados de capital en Estados Unidos," Copublicaciones, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 2012.
    2. Gutiérrez, Luis & Pombo, Carlos, 2008. "Capital markets and corporate governance in Colombia," Galeras. Working Papers Series 025, Universidad de Los Andes. Facultad de Administración. School of Management.
    3. Carlos Andrés Cano Gamboa & Marcela Orozco Chávez & Luis Alfonso Sánchez Betancur, 2008. "Mecanismo de transmisión de las tasas de interés en Colombia (2001-2007)," Revista Cuadernos de Economia, Universidad Nacional de Colombia, FCE, CID, July.
    4. Paula, Germano M. de, 2009. "Gobernanza corporativa, políticas públicas, mercado de capitales e inversiones extranjeras," Copublicaciones, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 2010.
    5. Clarke, Alvaro, 2009. "Buenos gobiernos corporativos para los negocios: el caso de Chile," Copublicaciones, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 2015.
    6. Paula, Germano M. de, 2009. "Gobernanza corporativa y mercado de capitales en Brasil," Copublicaciones, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 2013.
    7. Santiago Villegas Salazar, 2009. "Evidencia del canal de la hoja de balance a través de la inversión de las empresas colombianas (1995-2007)," Revista ESPE - Ensayos Sobre Política Económica, Banco de la República, vol. 27(60), pages 168-215, December.
    8. Gutiérrez, Luis H. & Pombo, Carlos, 2009. "Mercados de capitales y gobernanza corporativa en Colombia," Copublicaciones, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 2016.
    9. Viscencio Brambila, Héctor, 2009. "Gobernanza corporativa: el caso de México," Copublicaciones, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 2017.
    10. López-de-Silanes, Florencio, 2009. "Gobierno corporativo y mercados financieros en la OCDE y América Latina: lecciones para los cambios regulatorios después de la crisis financiera," Copublicaciones, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 2011.

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