2023-08-31-亚开行-通过市政债券调动资源_发达国家和发展中国家的经验（英）_167页_1mb

Summary of "Mobilizing Resources through Municipal Bonds: Experiences from Developed and Developing Countries"

Core Content

This working paper by Manoj Sharma, Junkyu Lee, and William Streeter explores the role of municipal bonds in financing urban development and climate-resilient infrastructure in developing member countries (DMCs) of the Asian Development Bank (ADB). It draws on experiences from both developed and developing economies to provide targeted recommendations for improving the municipal bond ecosystems in India, the Philippines, Viet Nam, and Indonesia.

The paper outlines the importance of municipal bonds in enhancing the financial sustainability of cities, particularly in the context of ADB's Strategy 2030, which emphasizes making cities more livable. It highlights the need for both internal and external ecosystems to support municipal bond issuance, including legal and regulatory frameworks, financial disclosure mechanisms, public debt ratings, and stock exchanges.

Main Recommendations

The report proposes four broad categories of recommendations for promoting municipal bond issuance in the target DMCs:

1. Debt Structuring

   • Broadening the stream of available revenues to secure municipal bonds through shared revenues and transfer payments.
   • Creating broader access to the domestic bond market for local governments with lower credit ratings using pooled finance.
   • Offering longer tenors for debt to increase budgetary flexibility, similar to the US model.
   • Utilizing ADB's role as an investor to create a secondary market for staggered and long-term debt maturities.

2. Redirection of Government-Owned Financial Institution Lending

   • Restricting the percentage of municipal lending by government-owned financial institutions to avoid crowding out bond market and commercial bank alternatives.
   • Securitizing loan portfolios to support local bond market development.

3. Redirection of ADB Local Government Sector Assistance

   • Redirecting a portion of ADB's local government assistance toward developing bank and bond market solutions.
   • Requiring a local government funding share as a prerequisite for financial assistance.
   • Providing credit enhancement mechanisms such as subordinated credit lines, intercepts of transfer payments, and partial risk guarantees.

4. Institutional Capacity Building

   • Enhancing municipal ratings and audit exercises to build investor confidence.
   • Conducting benchmarking studies to improve financial performance and debt management.
   • Seeding financial advisory services to support local governments in bond issuance.
   • Standardizing financial disclosure requirements between government institutions and the bond market to avoid inadequate transparency, as seen in the PRC.

Key Information

• Municipal Bond Ecosystems: The paper emphasizes the importance of both internal and external ecosystems for municipal bond development. Internal ecosystems include legal and regulatory frameworks, financial management, and governance. External ecosystems involve bond market infrastructure, such as stock exchanges, financial disclosure mechanisms, and public debt ratings.

• ADB's Role: ADB can play a critical role in promoting municipal bond issuance by providing financial assistance, credit enhancement, and institutional support. It can also leverage its position as an investor to develop secondary markets and support long-term debt instruments.

• Lessons from Other Markets: The report draws on experiences from Latin American countries (Mexico, Argentina, Brazil) and developed economies (US, PRC, Japan) to inform recommendations. For example, the US has a mature municipal bond market with a high percentage of municipal debt in public sector debt, while the PRC and Japan have developed credit enhancement mechanisms and regulatory frameworks.

• Current Status in Target DMCs:

  • India: Municipal bonds are limited, with only a small portion of public sector debt in the form of municipal bonds.
  • Philippines: Municipal bond issuance is minimal, with a very small share of public sector debt.
  • Viet Nam: Municipal bonds are in early stages, with a small percentage of public sector debt and limited market participation.
  • Indonesia: Municipal bond issuance is virtually nonexistent, despite efforts to promote it.

• Credit Enhancement: The paper highlights the need for credit enhancement mechanisms to improve the ratings of municipal bonds. It provides examples of how to credit enhance bonds internally through structured financing and externally through market-based providers.

• Challenges: The development of municipal bond markets in Asia is hindered by limited sovereign credit ratings, underdeveloped domestic bond markets, and the lack of comprehensive financial disclosure. Even in countries with ongoing decentralization efforts, municipal debt remains a small fraction of public sector debt.

• Opportunities: ADB is positioned to play a significant role in promoting municipal bond issuance in these countries by supporting credit enhancement, institutional development, and market expansion.

Conclusion

The paper concludes that while municipal bond markets in Asia are still underdeveloped, they offer a promising avenue for financing urban development and climate-resilient infrastructure. ADB is encouraged to take a proactive role in promoting municipal bond markets by supporting the development of internal and external ecosystems, credit enhancement, and institutional capacity building. The recommendations are tailored to the specific conditions of each DMC and aim to enhance the financial sustainability of cities in the region.