Set to slow down sharply in a second-half that’s littered with political risk.
After a blockbuster six months, the sale of emerging-market bonds in hard currencies is set to slow down sharply in a second-half that’s littered with political risk.
While it’s common for bond auctions to taper off in the second-half, this year saw a particularly fast start as renewed access to markets for many frontier issuers and juicy yields fueled a 32% surge in sales from the first six months of 2023, the biggest increase since 2017. Going forward, fewer sales would support prices as demand outweighs supply and keep issuers’ debt sustainability in check, according to Philip Fielding, co-head of emerging markets at MacKay Shields.
Any upheaval in the build-up toward US elections would impact market appetite and the timing of sales, said Jonathan Marshak, an emerging-market credit strategist at BNP Paribas SA. The vote could weigh on concerns about the US budget deficit and global trade, he said. ADVERTISEMENT: CONTINUE READING BELOW
“There will be a better window for issuance after the US election,” said Merveille Paja, a sovereign credit strategist for Eastern Europe, Middle East and Africa at Bank of America. The Fed’s first rate cut, which the bank has penciled in for December, would also be a boon for borrowing costs, she said.
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