2012, as beyondbrics readers know, was a record year for emerging markets bonds. But it turns out it was also a record year for defaults.
According to a new report out from Standard & Poor’s, defaults among EM corporate issuers accounted for about 30 per cent of global corporate defaults by issuer count – the highest in the 16 years since the rating agency started keeping scores. Continue reading »
Things are going from bad to worse for Suntech Power, the Chinese solar panel maker.
The company, which has been fighting to stay afloat amid falling panel prices and slowing demand, became the latest company from mainland China to default on its international bonds. Continue reading »
As the global economy continues its sputtering recovery, policymakers have an opportunity to take a strong stand on principles that may help mitigate further long-term damage. In particular, as regards Argentina, a relatively small country with a potentially large impact on the international financial system.
For a decade, responsible nations have watched impassively as Argentina has refused to abide by court decisions and flouted global financial norms. Continue reading »
By Federico Sturzenegger of Banco Ciudad de Buenos Aires
Last week Judge Griesa ruled that Argentina should pay to a holdout fund by the name of NML before December 15 the full amount of debt owed by the country. The ruling followed a previous one, based on the pari passu clause, which said that Argentina should pay at least something to the holdouts. Continue reading »
There was a time, not long ago – until Wednesday night, to be exact – when investors would pay a premium on emerging market debt subject to New York law. Not any more.
Judge Thomas Griesa’s ruling that Argentina must pay $1.3bn to holdout creditors has all sorts of implications for sovereign borrowers and lenders. It has also, at a stroke, wiped out the New York law premium, as a chart from Vladimir Werning at JP Morgan illustrates. Continue reading »
A hundred years ago if a country was reluctant to pay its debts, gunboats might have steamed to its shores. Since then sovereign immunity has reigned but the latest development in a legal argument over Argentina’s 2001 defaulted debt could shift the balance toward creditors. Whitney Debevoise, former US executive director of the World Bank, explains to capital markets correspondent Robin Wigglesworth the implications of the US court case on sovereign debt markets.
Argentina will have to pay $1.3bn to hedge funds that refused to restructure their debts after the country’s 2001 default when it makes regular payments to its restructured bondholders in December, a US court has ordered.
The ruling, made late on Wednesday in New York, raises the possibility that Argentina will default once more, and if upheld represents a major chink in the armour of sovereign immunity against creditors that has largely reigned in international law for almost a century. Continue reading »
It’s been a good year for emerging markets bonds. Even as investors, unnerved by the latest in the eurozone debt crisis, continue to pull out of EM equities and EM currencies, appetite for EM bonds shows no sign of abating.
EM bond issues for the first five months of the year are at a record high of $403.2bn according to data provider Dealogic, while fund inflows into the asset class hit $18.4bn for the year to May 2 compared to $5.7bn during the same period last year, according to EPFR data.
After more than three years of fully open access, we are taking the step of asking our readers to register on FT.com to read our articles. Beyondbrics will still be free but we'd like to know a bit more about you, our readers. Other FT blogs (including Alphaville) already do the same thing. Registration is active on beyondbrics from May 6.
Many of you are already registered on FT.com, or are subscribers - in which case, if you are logged in to the site you will not notice any difference. Just carry on as before.
For those of you not yet registered, it's a simple process which only takes a few moments.
Reading beyondbrics articles will NOT deduct from your free monthly quota of stories on FT.com.