Sovereign Wealth Funds, Debt Issuances, and the Development of Capital Markets

by Patrick J. Schena, Ravi Shankar Chaturvedi

Can and do sovereign wealth funds (SWF) promote the development of capital markets? SWFs are frequently maligned for pursuing objectives that extend beyond specific financial or investment mandates and performance goals to include extra-fund objectives. Certainly the keen interest and focus of most observers of such matters is on the political or geo-strategic nature of such agendas. However, can SWFs pursue auxiliary goals with positive externalities globally? In this context, we consider the role of SWFs in the development of local or regional capital markets.

To constrain the ambition of our immediate scope, we seek in this note to introduce and briefly reflect on the recent bond issuances by Temasek and Khazanah. These were respectively a Singapore dollar, exchangeable note and a Shariah-compliant renminbi (RMB) note. Each was creative in structure and opportunistic with respect to current market conditions.

Sovereign Wealth Funds, Debt Issuances, and the Development of Capital Markets