Date
20 November 2017
Years of ultra-low interest rates have helped push investors into the debt market while encouraging countries to raise money. Photo: Bloomberg
Years of ultra-low interest rates have helped push investors into the debt market while encouraging countries to raise money. Photo: Bloomberg

Emerging market debt issues hit record high

International sovereign bond sales by emerging markets jumped 54 percent year on year to US$69.47 billion in the first six months, the Financial Times reported.

The increase makes 2014 a record year for government debt issuance by emerging markets, the report said, citing data from Thomson Reuters. The figures do not include Chinese sovereign debt, which is not issued in international markets, it said.

“Countries are being sensible and refinancing shorter-term debts at a time when rates are low,” UBS emerging market strategist Bhanu Baweja was quoted as saying. “But the quality of issuance is deteriorating and that is something to worry about.”

Years of ultra-low interest rates following the 2007-08 financial crisis have helped bring down global bond yields, pushing investors into the debt market and encouraging countries to raise money, according to the newspaper. 

Some fear, however, that when interest rates start to rise in the developed nations, there will be a repeat of last year’s “taper tantrum”, when talk of winding down unconventional monetary policy led to a retreat from emerging market assets, the report said.

Total debt issuance by emerging market countries remains small compared to that of developed economies, which totalled US$157.6bn in the January-June period, it said.

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