That is, of course, in large part what EM investors are paid to do — analyse a broad array of often opaque risks particular to each credit while also looking at rates, global growth and commodity prices.
But part of the reason for that analysis of idiosyncratic risk is that EM investing is about buying paper from unproven credits with few comparables – but with extraordinary potential.
That was the story behind Uzbekistan’s debut bond this week, even if the deal was overcooked in final pricing — and it was a welcome story after a year beset by, among other problems, crises in Turkey and Russian sanctions to name just two.
The market responded to Uzbekistan’s new issue and reform plans with an enthusiasm not seen since 2017. Combined books of more than $5.5bn for a $1bn dual trancher and an eye-watering crunching of pricing in the process were a good signal. It has been difficult to get investors, drunk on their excitement for this bond, to talk of anything else — though something akin to a strong black coffee was administered during a dismal first morning’s secondary trading on Thursday.
Over the past year it has often seemed like EM investing was about finding the glimmer of hope in some very dark caves. Uzbekistan cheered the market up by reminding investors that deals to enthuse over are not always far away, and perhaps they will once more be the rule rather than the exception.
Now all eyes will be on the bonds to see if they live up to that initial promise.