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THE TRANSPARENCY STRATEGY OF A SMALL SOVEREIGN ISSUER. OECD-World Bank Market Forum Thordur Jonasson Sr. Debt Specialist – World Bank OPD. Why is transparency important for small sovereign borrowers. Domestic markets The biggest fish in the pond Foreign investors

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the transparency strategy of a small sovereign issuer

THE TRANSPARENCY STRATEGY OF A SMALL SOVEREIGN ISSUER

OECD-World Bank Market Forum

Thordur Jonasson

Sr. Debt Specialist – World Bank OPD

why is transparency important for small sovereign borrowers
Why is transparency important for small sovereign borrowers
  • Domestic markets
    • The biggest fish in the pond
  • Foreign investors
    • Do not allocate resources to cover small markets
    • Have tendency to overreact on negatives
    • Relevant and consistent communication is a pre-requisite for investment
scope of the strategy
Scope of the strategy
  • The debt manager is communicating policy decisions of government
    • Pockets of communication are beyond the debt managers control
      • Ministry of Finance
      • Other ministries
      • Central Bank
      • Others
  • Changing the dissemination of policy related information which has market impact
  • Did we want to be international?
what when where
What, when, where?
  • What: Definition of market sensitive information
  • When: Information calendar
    • Open meeting when disclosing borrowing plan
    • Regular consultations with market participants
  • Where: Media types to fit the messages
    • A targeted electronic publication
    • Websites
    • Mailing lists
    • Contributing prices to information vendors
a simple approach
Routine Impact Complex

Relevant

Media types

A simple approach

Overly rich communication causes confusion

Rich communication for complex changes

Routine communication for routine events

Too little information leads to mistrust

communicating with foreign investors
Communicating with foreign investors
  • Serious lack of material in English
    • Answering ad hoc queries is not efficient
  • Joint effort with market participants
    • Shared costs as incentives were aligned
    • Contacts lay with the banking system and marketing was individual
  • Centerpiece is a bond website run by the Debt Office
    • Consolidates research
    • Provides live pricing and roadmap of market infrastructure
    • Focused on the foreign investor
results
Results
  • Better communication
    • Other public institutions and market participants increased quality of own material and timely disclosure
    • Market sensitive information is now disclosed simultaneously in English published through a regulatory news window
    • Monitored through website information system on a regional and content basis
    • Monitored through feedback
lessons
Lessons
  • Important to get outside expertise to lead the project at the strategic level and think like a company
    • Product oriented communication
  • Joint approach with market participants was a success
    • Cost sharing kept them focused
    • Led to cooperation in other areas
  • Positive effects on communication throughout the capital market can be expected
  • Focus on low maintenance manageable processes
  • Increased awareness of the Debt Office
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