EM bonds

By Pan Kwan Yuk and Andres Schipani

Colombia on Tuesday became the latest country to tap the market’s ferocious demand for emerging market debt after it successfully sold $2bn of 30-year bonds abroad. Continue reading »

Global bond sales from emerging markets have defied all odds to hit a record high in 2013.

Despite the market turmoil caused this summer by concerns over the US Federal Reserve’s plans to scale back its monetary stimulus programme, EM bond issuance jumped to $506bn last year, surpassing the record $488bn in 2012, according to data from Dealogic. Continue reading »

Last week’s foray into positive territory didn’t last long. EM dedicated bond funds saw net outflows in the week to Wednesday according to EPFR, the Boston-based fund monitor, making 18 weeks of outflows out of 19 and reversing four weeks of what looked like improving sentiment towards EM issuers.

Flows to EM equity funds went negative, too, after three weeks of inflows. Continue reading »

Few expected September to be a record month for sovereign debt auctions. Ever since the US Federal Reserve first hinted in May at a possible “tapering” of its massive bond buying programme, emerging market countries have found borrowing much tougher and more expensive. Borrowing costs soared and issuance shrunk accordingly.

But then Fed decided to keep the printing presses whirring and EM yields settled down a bit. Not surprisingly countries took the opportunity to issue debt. The result? September ended up being the best month for EM sovereign debt issuance this year. Continue reading »

The party is back – thanks to Ben.

Over the past two days, borrowers from Colombia to Sri Lanka have rushed to take advantage of the window of opportunity created by the US Federal Reserve’s decision to keep the QE punchbowl flowing, raising at least $5.3bn on the international bond markets. Continue reading »

What's the yield on that?

What’s the going rate for a Kardashian? A yield of 6.25 per cent, according to Armenia’s bond issue.

The “Kardashian”, as it has been dubbed by Standard Bank’s head of emerging markets research Timothy Ash, will be issued in Armenia’s first international sovereign debt sale. Named after Kim Kardashian, a US celebrity whose family (see left) is originally from the country, the dollar bond is the latest exotic asset to have attracted investors’ gaze. Continue reading »

Hungary shows all the signs of joining the emerging markets rush to tap bond markets before the onset of any tapering gains effect, gearing up for a US bond issue of up to $5bn, according to a shelf registration filed with the Securities and Exchange Commission in New York on Tuesday. Continue reading »

Why change a winning formula? The International Finance Corporation was successful when it launched its first naira-denominated bond earlier this year, raising $76.3m after orders came in for more than double the original $50m offering. Now it’s back for seconds. And thirds.

The private sector arm of the World Bank will launch a series of bonds totaling $1bn in a bid to create more liquid capital markets in Africa’s second biggest economy, officials told beyondbrics. Continue reading »

Remember those Genghis bonds?

Back in November, eyebrows were raised in the emerging markets debt investment community when Mongolia – a country that has been rescued five times in the past 22 years by the International Monetary Fund – managed to raise $1.5bn at a price below Spain’s borrowing costs.

At the time, many took the sale – equal to nearly one-fifth of the size of Mongolia’s economy and akin to the US borrowing $2.5tn in one go – as yet another sign that investors, flushed with cash and desperate for yields, were jumping into markets that they don’t fully understand.

Fast forward eight months and the skeptics appeared to have been proved right. Continue reading »

It’s a sign of the times. Ghana on Thursday raised $750m from the sale of 10-year eurobonds, but the deal did not come easy.

With investors more cautious about lending to frontier countries with shaky finances following June’s violent market rout, Ghana had to pay a premium to get the deal off the ground. Continue reading »

To paraphrase that famous quote from Mark Twain, the reports of the death of investor interest in emerging market bonds appear to have been greatly exaggerated.

For proof, look no further than the spate of issues so far this month. This week, Bahrain successfully sold $1.5bn of bonds, joining Indonesia, Nigeria and Mexico’s Pemex in tapping the market following June’s market rout. Continue reading »

Don’t say we didn’t warn you. When El Salvador, a poor Central American country that’s been ranked among the world’s most violent, succeeded in raising $800m from international investors back in November – and at a rate that was more attractive than Portugal’s 10-year notes – beyondbrics wondered whether investors might be getting ahead of themselves.

Well, investors got something of a rude awakening on Tuesday after Fitch cut the country’s credit rating from BB to BB- and warned that it could cut again if the economy deteriorates further. Continue reading »

So, Kazakhstan has restated its intention to issue a $1bn eurobond, Reuters reported on Monday. The oil-rich nation has been talking about this for years but has been reluctant to pay interest for money when it is flush with cash already.

When the issue was last mooted in May, analysts said Kazakhstan could have expected to pay about 3 per cent a year, on a par with Russia. Perhaps the government has been prompted to get moving on a deal by Ben Bernanke‘s suggestion that the days of easy money may be drawing to an endContinue reading »

From stocks to bonds to currencies, whichever way you cut it, it’s been a quarter to forget for emerging markets. Having soared to new heights at the start of the year as money gushed in, the asset class suffered a rude awakening in June after the US Federal Reserve announced that it could soon start scaling back its massive bond programme. Here’s a review of the quarter in a couple of charts. Continue reading »

Look away now emerging market junk bond investors. What you are about to see is not pretty. While the sell-off in emerging market assets over the past few weeks has been pretty indiscriminate, EM high yield corporate bonds – having been one the main beneficiaries of investors’ “dash for trash” – are being hit harder than most.

Here’s a chart summing up the damages, courtesy of David Spegel, global head of emerging markets strategy over at ING. Continue reading »