Emerging markets sovereigns need to improve investor relations, says IIF

By Reshmi Basu

New York, Dec. 8 - While a number of countries have shown an increased commitment to improving transparency with investors, there are still substantial information gaps between debtors and investors, according to a comprehensive report published by the Institute of International Finance (IIF).

Since emerging markets have seen record net private capital flows, many countries have scrapped plans to further develop their investor relations programs.

The IIF expects that the final 2005 volume of net private capital flows will surpass $350 billion compared to the past record of $323 billion in 1996.

But that progress will be necessary when the market turns uncertain, said the report.

"In general, investor relations' efforts by emerging markets have improved over the past five years," said Robert B. Gray, chairman, of debt financing and advisory at HSBC Bank, in a statement.

"However, as the report shows that there is still a wide gap between the top performers and the majority of the countries in the survey. I believe that sovereign issuers need to move rapidly to establish formal investor relations programs that conform with market best practices."

The IIF report did find improvements. The report found that 26 out of the 30 countries report central government debt data within the quarter following the end of a reference period.

And 17 countries provide amortization schedules for central government debt. Fourteen of those countries update these schedules at least every three months.

Nonetheless, there is room for improvement.

The report finds that even though 28 countries post external debt data with quarter lag, only 12 make amortization schedules available.

The IIF specifically mentioned Brazil, Chile, Mexico, Korea, Philippines, and Turkey as largely implementing best practices while it said it noted Republic, Ecuador, China and Morocco as needing improvements.

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