Selected Issues Papers

Determinants of Sovereign Spreads in The Bahamas: Bahamas

By Josef Platzer

April 11, 2025

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Format: Chicago

Josef Platzer. "Determinants of Sovereign Spreads in The Bahamas: Bahamas", Selected Issues Papers 2025, 029 (2025), accessed April 14, 2025, https://doi.org/10.5089/9798229005258.018

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Summary

To analyze Bahamian sovereign spreads, a fundamentals-based model is estimated using data on emerging market economies. The main findings are: first, while both domestic and global covariates are important determinants of spreads, a sizeable effect comes from the interaction of global risk aversion and a country’s risk rating. Second, inclusion in the EMBIG index (Emerging Market Bond Index Global) is a significant driver for emerging markets. The spreads in The Bahamas would have compressed by 56 basis points compared to other countries with similar fundamentals if the archipelago were included in this index.

Subject: Balance of payments, COVID-19, Credit ratings, Current account balance, Emerging and frontier financial markets, External debt, Financial institutions, Financial markets, Financial services, Health, Inflation-indexed bonds, Money, Public debt, Securities markets, Sovereign bonds, Yield curve

Keywords: COVID-19, Credit ratings, Current account balance, EMBIG, Emerging and frontier financial markets, Extended Fund Facility, Inflation, Inflation-indexed bonds, Reserve currencies, Securities markets, Sovereign bonds, Sovereign Spreads, Standby Credit Facility, The Bahamas, Yield curve

Publication Details

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