THE TRANSPARENCY STRATEGY OF A SMALL SOVEREIGN ISSUER

1
THE TRANSPARENCY STRATEGY OF A SMALL SOVEREIGN
ISSUER

• OECD-World Bank Market Forum
• Thordur Jonasson
• Sr. Debt Specialist World Bank OPD

2
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

3
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?

4
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

5
A simple approach
Overly rich communication causes confusion
Rich communication for complex changes
Routine communication for routine events
Too little information leads to mistrust
6
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

7
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

8
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