Global Local Debt Markets
After a strong start to the year, global emerging market local currency debt issuance has taken a beating amid the volatility sparked by fears of a reduction in US quantitative easing. Local currency markets are more important than ever — but for stability to be achieved, the institutional investor base must broaden. Philip Moore reports.
Issuers look at local currency issuance for a variety of reasons, whether it be a manufacturer financing a foreign operation or a development bank looking to promote growth. One way or another, all are looking to take advantage of opportunities not available elsewhere, writes Philip Moore.
Latin American companies have been busily diversifying their funding sources in recent years, attracting strong demand for local currency bonds sold to global investors. That demand is having a big effect on what is achievable: coupons have fallen and tenors have risen, making global local deals a viable alternative. Philip Moore reports.
The outlook for Turkish Eurolira trades, which had been expected to be bright until investors took fright at the unrest in the streets earlier this year, now seems more challenging. In Russia, meanwhile, the hope is that the recent change to make government bonds Euroclearable can pave the way for easier issuance by corporates, writes Philip Moore.
The last few years have been a gift to Asian local currency markets as issuers and investors turned to the region while G3 markets struggled to find their feet. But with the US Federal Reserve indicating its willingness to reduce its bond buying programme when it can, the region has to prepare for what life will look like without quantitative easing, writes Lorraine Cushnie.
Africa’s local currency markets may well be the continent’s best chance for securing the kind of investment it needs. Buyside interest in the region is growing, helped by the work of the African Development Bank, but there is much more to be done. Philip Moore reports.
The International Finance Corporation has been instrumental in helping to develop capital markets across the emerging markets, and nowhere more so than in Africa, where the infrastructure investment requirement is so great. Philip Moore analyses the organisation’s three-pronged approach to local currency issuance.
Unhappy with the lack of liquidity available in conventional Europeso bonds, Latin America’s best-rated corporate América Móvil came up with a novel instrument — sold seamlessly to domestic and international investors — that would allow it to increase the proportion of its financing raised in local currency. Olly West reports.
Turkey’s big five banks — Akbank, Isbank, Garanti Bank, Vakifbank and Yapi Kredi — seem to be in a debt capital markets arms race. All five jumped into dollar bonds a few years ago, then Eurolira this year. But in terms of local currency issuance, Garanti is streaking ahead, hawking its paper via its new MTN programme in a way that would make even the most experienced Bazaar vendor look coy. Francesca Young finds out what the bank has its eye on next.
With dollar remittances pouring into the country from its citizens working overseas, the Philippines has been able to use global peso bonds to reduce its cost of borrowing. The synthetic deals have also given international investors an attractive way to play a well performing currency, although for the moment the sovereign looks unlikely to be followed by many corporates. Adrian Murdoch reports.
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