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 • 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 • 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: 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
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 • 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 • 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 • 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