Ely Sandler, Co-founder and Managing Partner of the Article Six Group and Fellow at the Harvard Kennedy School, joins Tellimer Founder Duncan Wales to explain why the cost of capital is the biggest barrier to investment in emerging markets, and why we know so little about it. Working with colleagues at Harvard and Oxford, Ely has built the first large-scale dataset of private sector borrowing costs across 66 developing economies, using transaction-level data from many of the largest EM investors. The findings challenge long-held assumptions: sovereign borrowing costs barely predict what private projects pay, and around half of projects borrow below their own government. They discuss the “investor confidence effect”, where an investor’s lending rate in a country falls by 220 basis points over its first five deals, and what this means for blended finance. The episode also covers how rising interest rates and electrification put pressure on EM financing, the shift from aid to export credit, and whether the EM risk premium comes down to information asymmetry.
The Emerging Markets Podcast dives into a range of topics in the emerging and frontier market world including investment themes, debt restructuring, elections, and geopolitical tensions.
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