Emerging-Market Sovereign Debt Hits Record High March 3, 2010Posted by Yilan in EU, European Union, Yunanistan.
Tags: debt, EU, Greece
International investors bought a record amount of sovereign debt from emerging markets in January, despite the destabilizing impact of the debt crisis in Greece on sovereign-bond markets.
The value of sovereign debt emerging markets sold to international investors hit $15.9 billion between the start of the year and January 29, according to Dealogic. That’s more than double the $7.2 billion issued a year earlier and up 29% from the previous record high of 2004.
Emerging markets sold 24% of all sovereign debt sold so far this year, compared with 14% a year earlier. Deutsche Bank AG is leading the bookrunner rankings for the year to date, according to Dealogic.
Turkey was the first emerging market to issue debt in 2010, launching a $2 billion, 30-year bond offer with a yield of about 6.6%. Since then, Poland issued a $4 billion deal yielding 5.7%, while Slovenia offering bonds valued at $2.2 billion with a 4.1% yield.
JP Morgan strategists have predicted that emerging markets will issue $66 billion of debt this year, with Argentina, Poland, Russia, Turkey, and Venezuela accounting for nearly half that.
Fears over a sovereign default in Greece have affected investor appetite for risky assets, such as emerging-market debt. Last month, Gary Jenkins, head of fixed-income research at U.K. broker Evolution Securities, said in note that the country could become then “next Lehman’s”, referring to the U.S. bank which caused a market panic when it filed for bankruptcy in 2008.
In a research note this morning, Deutsche Bank analyst Jim Reid characterized concerns over “Greece, the overall sovereign situation and signs of tightening in China” as “a series of jabs” in a battle between market bears and market bulls.
He predicted that market optimists would likely win out. “There is little doubt that the natural momentum is for the bulls to regain their composure,” Mr. Reid said.
The latest fund manager survey from Bank of America Merrill Lynch, released last week, found that 47% of institutional investors polled said they invested in emerging markets—a near all-time high, according to the bank.