Effect of sovereign risk and debt-side governance on cross-border infrastructure risk premium in a developing nation: The case of Kenya

IF 2 3区经济学 Q2 DEVELOPMENT STUDIES

Development Policy Review Pub Date : 2025-04-09 DOI:10.1111/dpr.70010

Salome Oyuga, Edward Godfrey Ochieng, Geoffrey Ngene

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引用次数: 0

Abstract

Motivation

Developing countries' reliance on foreign capital for large-scale infrastructure projects makes sovereign risk premium and debt-side governance practices key determinants of cross-border infrastructure risk premiums.

Purpose

This study estimates the effect of international sovereign bond spreads (systematic risk) and debt-side governance (unsystematic risk) on cross-border infrastructure risk premiums in Kenya's major infrastructure projects from 2011 to 2020.

Approach and methods

We use pooled and random-effects panel data analysis of secondary data.

Findings

The findings show that rising international sovereign bond spreads (ranging from 9.6% to 32.39%), corruption levels, external debt-to-import ratios, loan utilization rates, disbursement delays, and climate risk disclosure significantly contributed to increasing cross-border infrastructure risk premiums. The interaction between bond spreads and corruption had a compounding effect in increasing cross-border infrastructure risk premiums. On the other hand, longer loan maturities, higher internal rates of return, substantial government involvement, and a rising external debt to total investment ratio reduce project risk premiums.

Policy implications

These findings underscore the need for Kenya's modern Public Debt Management Office and infrastructure execution institutions to reduce external borrowing costs through governance reforms that improve transparency, project oversight, and environmental standards. By strengthening debt-side governance, Kenya can reduce its external borrowing costs and improve the sustainability of infrastructure-led debt. As such, the study offers actionable insights for low- and middle-income countries, emphasizing the role of modern sovereign debt management tools that target sustainability and strategic governance reforms at the project level in attracting more favourable borrowing rates for infrastructure financing.

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主权风险和债务方治理对发展中国家跨境基础设施风险溢价的影响：以肯尼亚为例

动因发展中国家的大型基础设施项目依赖外国资本，这使得主权风险溢价和债务方治理措施成为跨境基础设施风险溢价的关键决定因素。目的本研究估算了国际主权债券利差（系统性风险）和债务方治理（非系统性风险）对 2011 年至 2020 年肯尼亚大型基础设施项目跨境基础设施风险溢价的影响。方法我们对二手数据进行了汇总和随机效应面板数据分析。研究结果研究结果表明，国际主权债券利差（从 9.6%到 32.39%不等）、腐败程度、外债与进口比率、贷款利用率、付款延迟和气候风险披露的上升大大增加了跨境基础设施风险溢价。债券利差与腐败之间的交互作用对跨境基础设施风险溢价的增加具有复合效应。另一方面，较长的贷款期限、较高的内部收益率、政府的大量参与以及外债与总投资比率的上升都会降低项目风险溢价。政策影响这些研究结果突出表明，肯尼亚的现代公共债务管理办公室和基础设施执行机构需要通过治理改革来提高透明度、项目监督和环境标准，从而降低外部借贷成本。通过加强债务方治理，肯尼亚可以降低外部借贷成本，提高以基础设施为主导的债务的可持续性。因此，本研究为中低收入国家提供了可操作的见解，强调了针对可持续性的现代主权债务管理工具和项目层面的战略治理改革在为基础设施融资吸引更优惠借贷利率方面的作用。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Development Policy Review DEVELOPMENT STUDIES-

CiteScore

3.50

自引率

5.90%

发文量

期刊介绍： Development Policy Review is the refereed journal that makes the crucial links between research and policy in international development. Edited by staff of the Overseas Development Institute, the London-based think-tank on international development and humanitarian issues, it publishes single articles and theme issues on topics at the forefront of current development policy debate. Coverage includes the latest thinking and research on poverty-reduction strategies, inequality and social exclusion, property rights and sustainable livelihoods, globalisation in trade and finance, and the reform of global governance. Informed, rigorous, multi-disciplinary and up-to-the-minute, DPR is an indispensable tool for development researchers and practitioners alike.