Debt and democracy — how polls, politics and protest weigh on capital markets
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Debt and democracy — how polls, politics and protest weigh on capital markets

◆ UK ousts Tories from power... ◆ ... setting up final round of French elections as only bar to primary market revival ◆ EM debt restructurings: balancing what creditors demand with what voters need

July 2, 2024, Nairobi, Kenya: Protesters take part in an anti-government protest. Kenyan demonstrators took to the streets despite President William Ruto's announcement on 26 June that he would not approve a finance bill proposing new tax hikes. Anti-riot

This week, we looked once again at the intersection of politics and capital markets. The Labour Party, as predicted, won the UK general election by a landslide, with departing prime minister Rishi Sunak on his way to Buckingham Palace to resign as prime minister as we recorded.

But what does the outcome mean for debt markets? Well, it may not matter as much as what is set to happen in France over the weekend, which has the final round of parliamentary elections. We discuss the likely outcomes and ramifications of those and how issuers will approach the bond market in their aftermath next week.

Meanwhile, although further news of progress with emerging market sovereign debt restructurings might be encouraging for the asset class, we note that the recent violent protests in Kenya underscore the difficulty in balancing the demands of international creditors with the needs of citizens for governments in debt distress.

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