LONDON (Reuters) – Ukraine’s dollar bonds suffered a sharp selloff on Tuesday, plunging to multi-month lows as investors priced in the growing probability of debt restructuring and lower recovery rates for bondholders.
While Kiev’s ceasefire with pro-Russian militants in the country’s east is holding, its finances are looking increasingly untenable, with the economy set to shrink 8-9 percent in 2014 and the currency having lost about 40 percent so far this year.
LONDON, Sept 18 (Reuters) – Investors are starting to price
the risk of Russia’s credit rating falling to junk if Western
sanctions and Moscow’s response plunge the economy into
recession and deplete its $450 billion reserves.
Being investment grade – at least BBB minus from Standard &
Poor’s and Fitch or Baa3 from Moody’s – allows a borrower to tap
a far wider pool of investors, and losing that ranking would be
likely to cause big outflows from Russian markets.
LONDON (Reuters) – Expectations of a hawkish tone from the U.S. Fed this week pushed emerging stocks towards their ninth straight day of losses on Tuesday, while in Russia, the rouble tumbled to another record low against the dollar.
The U.S. Federal Reserve meets on Tuesday and Wednesday and is expected to flag the end of its bond-buying program and to provide clues about the timing of its first rate rise. While the dollar has steadied after strong gains last week, emerging assets are increasingly pricing in the prospect of reduced global liquidity.
LONDON, Sept 14 (Reuters) – The global fund management
industry is a potential source of risk for emerging markets
because of its vast size and herd-like investor behaviour that
can exacerbate asset price fluctuations, a BIS report said on
In its quarterly review, the Bank for International
Settlements said the selloff that rocked emerging economies last
year was a reminder of how “the activity of large asset managers
can significantly affect small and illiquid asset markets”.
LONDON, Sept 12 (Reuters) – Just as vaccines work by
stimulating the body’s immune system, last year’s selloff may
have helped emerging markets build defences against the damage
they have suffered during past U.S. rate rise cycles.
This week’s market moves are rekindling memories of past
emerging market crises, after a paper from the San Francisco
branch of the U.S. Federal Reserve sparked a surge in the
greenback and U.S. yields, an issue which is likely to be
debated at next weekend’s G20 meeting of world powers.
LONDON, Sept 11 (Reuters) – Emerging stocks eased slightly
to touch new three-week lows on Thursday and most currencies
steadied from large losses earlier in the week but the prospect
of new EU sanctions kept Russian markets under pressure.
The dollar traded just off 14-month highs against a basket
of major currencies and U.S. 10-year yields stood just off
one-month peaks, following robust gains fuelled by a San
Francisco Fed research paper that showed markets could be
underestimating the magnitude and speed of U.S. rate rises next
By Alexander Winning
What are the chances that Western investors will rush back to Russia if a shaky ceasefire in Ukraine leads to a more lasting peace? Pretty slim, judging by a keynote speech at a recent Russia-focused investment conference in London.
Dmitri Trenin, director of the Carnegie Moscow Centre, told the conference organised by Sberbank CIB, the investment-banking arm of Russia’s top state-controlled lender, there was little prospect of significant Western investment in Russia over the next 5 years:
LONDON, Sept 10 (Reuters) – The cost of hedging against
sharp fluctuations in many emerging-market currencies jumped to
multi-month highs on Wednesday, and derivatives markets indicate
that bets against them are on the rise as the dollar
A rising dollar and higher Treasury yields are spooking
investors engaged in dollar-based carry trades – borrowing at
low interest rates to invest in a higher-yielding, riskier
asset. The result has been a sudden spike in volatility, after
it spent the summer trading near long-term lows.
LONDON, Sept 10 (Reuters) – Emerging currencies fell more
than 1 percent on Wednesday and currencies such as the lira and
rand extended losses to trade at multi-month lows on growing
expectations of a broad-based rally in the U.S. dollar.
The dollar is near 14-month highs versus a basket of major
currencies and could breach levels not seen since 2010 after a
paper from the San Francisco Fed indicated markets are well
behind the curve in pricing the U.S. rate rise trajectory.
LONDON, Sept 8 (Reuters) – Russian shares and the rouble
edged lower on Monday as a ceasefire in Ukraine appeared to be
largely holding, while easy global monetary policy kept eastern
European bonds and emerging stocks near multi-year highs.
Though emerging markets, especially in Europe, are
vulnerable to loss of trade and other pressures stemming from
Ukraine’s conflict with pro-Russian rebels, they are still
supported by the stream of cheap cash from developed world