Expensive emerging markets assets may be vulnerable
LONDON, Nov 15 (Reuters) – The looming U.S. fiscal cliff of
tax rises and spending cuts combined with renewed euro zone
tension over Greece are threatening demand for riskier emerging
market assets, just when some are getting expensive.
It is all making the asset class vulnerable to a pullback.
Once high-yielding bonds are offering less than they were
and although emerging equities have performed less well than
fixed income, some sectors within them are looking pricey.
Emerging Policy-surprises all round
A cut was expected, but not there. Israel sliced rates to 2 percent on Monday, surprising even the central bank’s own economists, who forecast steady rates till the end of next year. India’s central bank, meanwhile, kept rates steady earlier today, even though the country’s government had been pushing for a trim.
Emerging economies continue to grapple over whether it’s better to tackle growth or to fight inflation. For the Reserve Bank of India, which left rates at 8 percent but chopped banks’ cash reserve ratios, an inflation rate of nearly 8 percent in September was enough to cause alarm.
Spanish bonds regaining favour among some investing elite
LONDON, Oct 25 (Reuters) – The ECB’s bond-buying plan,
Madrid’s reforms and global monetary easing are luring foreign
investors back to Spanish sovereign debt, particularly for
short-term paper.
It is a case of searching for yield while knowing that the
European Central Bank has your back.
Emerging Policy-Philippines cuts, Mexico to hold steady?
Emerging market economies continue their trend to spur on growth rather than fight possible QE-induced inflation, with the Philippines cutting rates earlier today.
The Philippines’ central bank cut overnight rates by 25 bps to a new low of 3.5 percent for the borrowing window and 5.50 percent for the lending facility, a move helped by annual inflation at the lower end of the country’s 3 to 5 percent target band.
Forgive and forget in emerging debt?
If you’re an emerging market borrower, it seems like it’s a great time for sorting out those old troublesome debts as pumped-up yield appetite in the fixed income universe encourages another bout of selective amnesia among creditors and bond investors.
Serial defaulter Ivory Coast met investors in London this week, next stop New York later today, to discuss a new schedule for missed coupons on its $2.3 billion bond due 2032.
Deleveraging: not as bad as all that?
LONDON, Oct 18 (Reuters) – Worries about a chaotic
withdrawal of assets by cash-strapped western European banks
from central and eastern Europe appear so far to have been
overdone.
The previously feared draining of cash has been less than
expected.
Around 75 percent of banking assets in central and eastern
Europe are owned by western European banks – with Bulgaria,
Hungary and Romania particularly exposed.
Booming emerging corporate debt vies with U.S. junk
LONDON (Reuters) – New funds targeting debt issued by emerging market companies have helped push outstanding issuance past $1 trillion as investors chase high returns while sidestepping problems in developed economies.
Total volumes of debt issued by emerging companies are up tenfold since 2000 and the size of the market now rivals that for U.S. high-yield bonds. Investors are attracted by companies’ strong balance sheets and rising demand for consumer goods and financial services in most emerging economies.
Analysis: Hard slog for London’s offshore yuan bond market
LONDON (Reuters) – London launched an offshore yuan currency and bond market to great fanfare six months ago, but the bond side will struggle to develop unless British and Chinese authorities take steps to make trading easier.
The need for such measures has become even greater this year as potential investors have been discouraged from buying yuan bonds by China’s slowing economic growth and by a slump in one-year yuan non-deliverable forwards to price in a depreciation.
Hard slog for London’s offshore yuan bond market
LONDON, Oct 4 (Reuters) – London launched an offshore yuan
currency and bond market to great fanfare six months ago, but
the bond side will struggle to develop unless British and
Chinese authorities take steps to make trading easier.
The need for such measures has become even greater this year
as potential investors have been discouraged from buying yuan
bonds by China’s slowing economic growth and by a slump in
one-year yuan non-deliverable forwards to price in a
depreciation.
Kazakh wealth fund forges debt deal for No.3 bank
ASTANA/LONDON, Oct 3 (Reuters) – Kazakhstan’s sovereign
wealth fund has rescued the country’s No.3 bank for the second
time in as many years, forging a deal to cut the bank’s $11.2
billion of debt that will see its majority stake rise and
creditors lose less than feared.
The deal triggered a rally in the heavily discounted bonds
of the bank – BTA – as creditors will recover more of
their outlay than seemed likely when BTA defaulted in January.
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