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from MacroScope:

Davos Day Two — Rouhani, Lew and Lagarde

Day one in Davos showed the masters of the universe fretting about Sino-Japanese military tensions, the treacherous investment territory in some emerging markets and the risk of a lurch to the right in Europe at May’s parliamentary elections which could make reform of the bloc even harder.

Today, the focus will be on Iranian President Hassan Rouhani (and his main detractor, Israel’s Netanyahu). Presumably he’s there to woo the world of commerce now sanctions are to be relaxed in return for Tehran suspending enrichment of uranium beyond a certain level. Anything he says about Syria’s peace talks, which have so far been more hostile than conciliatory, will instantly be headline news.

Other big name speakers are U.S. Treasury Secretary Jack Lew, IMF chief Christine Lagarde, who is going around warning about the threat of European deflation, Australian premier Tony Abbott, who is running the G20 this year, and a session featuring the BRICS finance ministers.

There is clearly a pervading sense of caution, if not alarm, about emerging markets. That aside, with the U.S. recovering and the existential threat to the euro zone over, perhaps delegates will look most nervously to the east.

from Global Investing:

A (costly) balancing act in Hungary

A bond trader in London is still marvelling at the market's willingness to snap up a Eurobond from Hungary, calling it a country with "a policy mix so unorthodox even Aunty Christine won't lend to them".  But Hungary's probable glee at bypassing the IMF and "Aunty Christine"  with $3.25 billion in two bonds that were almost four times oversubscribed, is probably short-sighted.

Hungary needs to raise the equivalent of $23.4 billion this year to repay maturing debt. The bond placement will enable Hungary to easily meet the hard currency component of this, and it has been enormously successful in luring buyers to domestic debt markets.  Such has been the demand for Hungarian bonds in recent months that foreigners' holdings of forint-denominated government debt are at a record high of over 45 percent.

from Global Investing:

Hungary’s plan to get some cash in the bank

Hungary says it might borrow money from global bond markets before it lands a long-awaited aid deal with the International Monetary Fund. That pretty much seems to suggest Budapest has given up hope of getting the IMF cash any time soon. Given the fund has already said it won't visit Hungary in April, that view would seem correct.

There is some logic to the plan.

Hungary desperately needs the cash -- it must  find over 4 billion euros just to repay external debt this year.

from Global Investing:

Emerging bonds: crawling out of the woodwork

Now that markets appear to have decided that a $1 trillion stabilisation package from the European Union is enough to soothe global nerves and ward off a sovereign debt crisis, emerging market sovereigns and corporates may start to issue bonds again.

Emerging market debt issuance was heading for a bumper year -- at more than $100 billion issued so far -- before investors started to fear an imminent default by Greece and markets froze up.  

from Commentaries:

Ukraine’s Naftogaz leaves Eurobond holders with little choice

UKRAINE-RUSSIA/NAFTOGAZThe repayment date for Ukrainian state energy group Naftogaz's $500 million Eurobond came and went on Wednesday, but all bondholders got was a coupon payment.

Talks to restructure the five-year bond have resulted in Naftogaz presenting its solution to the problem -- swapping the old 8.125 percent bonds for new five-year ones which pay a slightly higher coupon of 9.5 percent and come with a government guarantee.

from The Great Debate UK:

Bonds steal thunder from loans in Europe

alex-smith- Alexander Smith is a Reuters columnist. The opinions expressed are his own. -

When the going got tough, banks were quick to bring down the shutters and cut off loans to European companies, forcing them to seek other sources of funding. The result -- a dramatic shift to the bond markets, where corporates borrow directly from investors.

This failure of the banks to be there when borrowers needed them most could spell the end of the European syndicated loan market as the powerhouse of corporate finance activity in the region, marking a longer-term shift in the funding mix for European companies from loans to bonds.

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