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Kendall P. Miller
Understanding SSA IssuersSSAs issue debt on a regular basis to fund regional projects and development programs, but must adhere to relatively conservative capital requirements, balance sheet constraints and lending standards written into their charters. These guidelines limit the type and amount of direct lending possible, with recourse on many public sector borrowers (many of whom have taxing power) to mitigate ultimate exposure.
These borrowers attempt to maintain benchmark issues denominated in the major reserve currencies to maintain the necessary liquidity to retain end investor interest. A similar symbiotic relationship to that of official investors and the U.S. Treasury is in play in the SSA market, as foreign issuers benefit from the ability to borrow cheaply in USD, while global investors continually need to recycle dollar funds. This dynamic perpetuates current reserve allocations among central banks/SWF.
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