The legal battle between Argentina and its hedge fund creditors is approaching a finale. Few expect it to end in anything other than a crushing defeat for Buenos Aires.
Anticipating its rout, Argentina earlier this week asked for an unlikely Supreme Court hearing. While this may delay a reckoning, the New York courts will probably leave Buenos Aires facing a stark but unpalatable choice: pay hedge funds led by Elliott Management – or default on its international debts again. Given that Argentina excoriates its opponents as “vultures”, it is expected to choose the latter option. Continue reading »
Sovereign debt restructuring is like baking a cake, some experts quip. With the appropriate ingredients – creditor pain stirred in, a sprinkle of fiscal adjustments – the process can be relatively smooth and the outcome fairly equitable.
So far, it seems Belize is not following the right recipe. Continue reading »
While most Americans were queuing to cast their votes in the US presidential election, lawyers working for Elliott Associates were filing a request for a New York court judge to expedite its ruling against Argentina, the hedge fund’s nemesis.
Investors who still hold Argentina’s defaulted debt include thousands of Italian retail investors, but Elliott and Aurelius Capital – another hedge fund set up by a former Elliott executive – have been the most aggressive in chasing Buenos Aires through the courts. Continue reading »
Sub-Saharan Africa’s local bond markets are for the most part small and rudimentary and lack transparency. In some cases even yields are difficult to find. But many have made significant progress in recent years, potentially offering succour to companies starved of institutional funding.
These markets – where the debt securities are priced in Nigerian naira, Kenyan shillings, Zambian kwacha or Botswana pula, as opposed to US dollars – are mostly dominated by government bonds. For companies the cost is often high and the process arduous. But several markets now boast an array of corporate bonds – and more are on the way. Continue reading »
Spain may not be Uganda, as its premier Mariano Rajoy undiplomatically exclaimed in a text to his finance minister earlier this year. According to bond investors, it is Zambia.
The Republic of Zambia this week sold its maiden 10-year dollar-denominated bond, raising $750m from international investors. Funds swamped the deal with orders of about $12bn, allowing the country to price the bond at a yield of just 5.625 per cent. Spain’s 10-year bond yield is currently 5.78 per cent. Continue reading »
If only the economic performance of the Caribbean matched the sporting prowess of its athletes.
The Caribbean may be sunnier than Europe, but it shares many of the Old Continent’s problems – namely anaemic economic growth, uncompetitive economies and burgeoning debt burdens. Continue reading »
There are many investors whose success and longevity has translated into financial fame. But few have been the subject of a Japanese Manga-style illustrated book detailing their exploits. Yet Mark Mobius’ striking bald pate and status as a pioneer of investments in strife-torn, underdeveloped countries made him a fitting, if unusual, subject of a 2007 comic by Kaoru Kurotani – Manga Mark Mobius, an Illustrated Biography of the Father of Emerging Markets Funds.
The “emerging markets” moniker was first invented by Antoine van Agtmael of the International Finance Corporation in 1981 to rebrand nations previously known as “less-developed countries”. But it was Mobius who was approached by Sir John Templeton to launch what is considered the first dedicated emerging market equity fund in 1987. Continue reading »
UBS’ capture of Italian dealmaker Andrea Orcel from Bank of America Merrill Lynch has paid another dividend in the form of a lead role on VTB’s $1bn perpetual bond sale, the first VTB deal the Swiss bank has worked on in over a decade.
VTB, Russia’s second largest lender, on Friday sold a $1bn perpetual Eurobond yielding 9.5 per cent to boost its core capital. It is relatively unusual for financial institutions to issue perpetual bonds, which are never paid back, and it is the first such instrument to be sold by a Russian bank. Continue reading »
After a discreet but damaging spat over licensing that saw Saudi Arabia fall out of MSCI’s indices in 2009, the Middle East’s largest economy and the world’s most influential emerging markets index provider appear to have kissed and made up.
MSCI said on Monday that it will reintroduce its Saudi Arabia Domestic Indices and related regional indices – such as the MSCI Arabian Markets – in June, a move that some hope could signal another move by Saudi Arabia to ease foreign investor access to its bourse, the largest and most liquid in the Arab world. Continue reading »
Emerging market equity investors may not always like the smell of state control, fearing that the interests of minority shareholders may be hijacked by activist governments, but as Morgan Stanley showed in a recent research note, state-owned companies have overall outperformed their private counterparts in recent years.
Indeed, they have done much better. The 122 members of the MSCI Emerging Markets index that have state ownerships of 30 per cent or more have beaten the index by a cumulative 260 per cent since January 2001, and by 33 per cent since late October. Continue reading »
What country enjoys a bountiful tourism industry and pleasant weather, but has seen a government overspending and ill fortune send its indebtedness soaring, forcing a sorely needed sovereign restructuring?
The answer, of course, is Saint Kitts and Nevis, the lush West Indies island federation.
The similarities don’t end there. Like Greece, St Kitts has been locked in an inflexible monetary bloc – the East Caribbean Currency Union – limiting its options in the face a debt-to-gross domestic product of almost 200 per cent when it first embarked on a restructuring last summer. Continue reading »
While interest in frontier market debt may be waxing, international investment in frontier equity markets has waned considerably of late.
After robust inflows over most of 2010, funds dedicated to frontier markets and tracked by EPFR Global, a data provider, have suffered a five month streak of net outflows. Investors have now withdrawn money for nine of the past 12 months, cutting the total assets under management to $7.5bn. Continue reading »
Riyadh may be a parched, inhospitable place for dapper fund managers, but many may start to make more regular pilgrimages to the capital of Saudi Arabia in the coming years – and not just to raise fresh funds, the traditional cause for a visit in the oil-rich state.
Saudi Arabia’s Tadawul stock market, the largest and most liquid in the Arab world, may this year finally allow foreign institutional investors to invest directly into its blue-chip listed companies, rather than the swaps the Capital Markets Authority introduced in 2008. Continue reading »
Debt may have been the drug of choice for western economies – at least before the financial crisis turned leverage into a dirty word – but emerging markets are increasingly starting to dabble in the dangerous stuff.
While global debt issuance, including sovereign, sovereign-linked entities, financial institutions and companies, dipped 6 per cent last year, emerging market debt issuance climbed 11 per cent to a record $849bn last year, according to Dealogic. Developing markets accounted for 15 per cent of the global total – another record. Continue reading »
While most western governments are by now checking ministry sofas for any loose change that might have been lost in the creases, Saudi Arabia increased spending by 25 per cent this year – and has still been able notch up budget surplus north of $81bn, or 14 per cent of the kingdom’s annual economic output.
Emboldened, the kingdom now plans to raise government spending further next year, to an all-time budget high of SR690bn next year, according to the 2012 fiscal plan approved on Tuesday. A planned SR250bn splurge on housing projects comes on top, as the money needed has already been deposited at the central bank. Continue reading »