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.
The West African country defaulted on the bond early last year during political unrest which later broke into civil war. That bond was launched only in 2010 as a restructuring of previous debt on which Ivory Coast defaulted in 2000. If that isn’t confusing enough, the 2000 default was of U.S.-underwritten Brady debt, which itself was a repackaging…
Meanwhile, Kazakh bank BTA, owned by the country’s sovereign wealth fund, this month agreed a $11.2 billion debt restructuring deal, after it defaulted earlier this year. The sovereign wealth fund, Samruk-Kazyna, had already stepped in to help the bank with a restructuring in 2010 when it defaulted during the global financial crisis. So this was the second default in the space of two years.
But demand is such for high-yielding emerging market debt, particularly in commodity-rich countries, that investors are likely to forget the past as they lap up the present juicy yields.