State-Owned Enterprises as Catalysts of Corporate Bond Market Development in Moldova

Abstract

This paper examines how state-owned enterprises (SOEs) in the Republic of Moldova can accelerate domestic capital-market development through the issuance of corporate bonds. Building on prior empirical work that identified a mutually reinforcing relationship between SOE reform and capital-market reform in Moldova, the article develops a deeper policy and market-design framework focused on corporate bonds. The analysis combines Moldova-specific financial and institutional evidence with international experience from state-owned and state-controlled issuers, including Baltic energy utilities, Singapore's Temasek, Chile's Codelco, France's EDF, and Central and Eastern European energy transition bond issuers. The paper argues that SOE bond issuance can be an effective market-development instrument when four conditions are met: commercially credible issuers, transparent ownership and governance, disciplined project selection, and a predictable issuance and post-issuance disclosure regime. For Moldova, SOE bonds could help diversify financing away from bank lending, lengthen maturities for infrastructure and utility investment, improve the public accountability of large SOEs, and crowd in private issuers by creating benchmarks, investor familiarity, and intermediation capacity. The paper estimates that the initial group of financially stronger SOEs identified in previous work has a theoretical issuance potential of approximately MDL 5.1 billion, a scale large enough to materially increase the supply of domestic securities if implemented gradually and with safeguards. The proposed roadmap recommends a sequenced pilot programme anchored in one or two investment-grade-like SOEs, mandatory independent audit, use-of-proceeds discipline, credit-risk assessment, public disclosure, exchange listing, central securities depository settlement, and a post-issuance monitoring framework. UDC: 334.724:336.763(478); JEL: L32, L51, L53