LONDON, June 30 (Reuters) – Emerging market borrowers sold
over $260 billion worth of bonds in the first half of 2014,
outstripping year-ago levels despite geopolitical noise as
borrowers rushed to take advantage of lower-than-expected U.S.
The hard currency debt market was hampered by the
Ukraine-Russia conflict and a sharp fall in Russian bond sales.
But a 50-basis-point fall in U.S. 10-year yields, the benchmark
for most emerging debt, has more than made up for the
A colleague of mine, Marius Zaharia (@MZaharia) interviewed Moritz Kraemer, Standard and Poor’s head of sovereign ratings for Europe, Middle East and Africa. (you can read the interview here) Kraemer offered this piece of advice to the African governments who are busily tapping bond markets these days:
What I want to tell all those governments in africa is that you are not a successful market participant when you’ve issued your first eurobond. You are a successful participant when you’ve paid it back for the first time.
LONDON, June 27 (Reuters) – Shares in major Bulgarian banks
fell on Friday for a second straight day and the country’s
debt-insurance costs rose towards 15-month highs as problems at
its banks threatened to spread.
Elsewhere, weaker U.S. economic data reinforced the view
that the Federal Reserve would be in no hurry to tighten policy.
The dollar fell to a one-month low against major currencies and
helped to boost most emerging-market assets.
LONDON, June 25 (Reuters) – Emerging markets came under
pressure on Wednesday as conflict in Iraq kept oil prices near
their nine-month highs, but stock markets in the Gulf stabilised
as construction firm Arabtec slowed a three-day slump.
Markets have gained confidence that the U.S. Federal Reserve
will not start raising interest rates before mid-2015. But they
are being spooked by high oil prices and the prospect of Western
air strikes on Iraq, where militants are fighting government
forces less than 100 km (60 miles) from Baghdad.
LONDON, June 24 (Reuters) – An easing in sanctions-related
tension with the West is allowing Russian companies to explore
global bond markets after a four-month hiatus but they must
prepare to pay up to lure investors.
After bond buyers last week shrugged off concerns about
militant attacks in Kenya and Ecuador’s serial defaults, it
seems unlikely that bond issues from Russia’s mighty state-run
companies can fail.
LONDON, June 23 (Reuters) – Sberbank returned to global bond
markets on Monday, the first Russian state-run firm to do so
since February, while the rouble and stocks led gains on
European emerging markets thanks to strong Chinese economic
Markets broadly shrugged off the oil price surge caused by a
spreading insurgency in Iraq after a preliminary HSBC survey
showed activity in China’s factory sector expanded in June for
the first time in six months as new orders surged.
LONDON, June 20 (Reuters) – Ukrainian bonds rose slightly on
Friday, recovering from panic over possible debt restructuring
though most emerging assets weakened against the backdrop of
violence in oil exporter Iraq and a rise in U.S. bond yields.
Emerging stocks were set to snap two weeks of gains, falling
0.3 percent on the day despite record highs on the
world equity index, and most currencies slipped, with energy
importers facing the prospect of significantly higher oil
LONDON, June 13 (Reuters) – Emerging market bond sellers and
European funds are both revelling in an explosive rise in euro
debt sales that offer cheap cash to borrowers while providing
investors with higher yields than anywhere in the euro zone.
Borrowers had already turned to the euro market in recent
months as expectation of policy easing by the European Central
Bank cut borrowing costs and weakened the euro.
South Africa is due ratings reviews this Friday. Chances are that the Standard & Poor’s agency will cut its BBB rating by one, or possibly even two notches. Another agency Fitch has a stable outlook on the rating but could still choose to downgrade the rating rather than the outlook. What will be the damage?
There is undoubtedly a link between ratings and bond prices. So a one-notch ratings downgrade tends to lead to roughly a 20 percent increase in bond yield spreads and credit default swaps (instruments that are used to hedge against default), according to calculations by JPMorgan. But in South Africa the lower credit rating may already be already reflected in asset prices — Panama, Brazil, Colombia, Philippines, Uruguay, Indonesia, and Romania carry lower sovereign credit ratings but boast lower CDS and dollar bond yield premia over Treasuries. Russia and Turkey have lower average ratings than South Africa but their debt and CDS spreads are roughly on the same level.
LONDON, June 10 (Reuters) – The South African rand fell 0.7
percent on Tuesday versus the dollar, lagging emerging peers as
a stubborn economic downturn looks set to deepen while broader
emerging equities extended gains to one-year highs.
Emerging markets worldwide have been buoyed by signs of
economic recovery in China and United States, as well as euro
zone monetary easing, while bond investors are betting that
developing countries especially in eastern Europe would follow
the ECB in cutting interest rates.