Developing countries have sold a massive $39 billion in international bonds since the start of the year, with investors willing to pile on riskier debt as they bet that global interest rates are peaking.
In the first half of January, 11 countries launched more than 20 bond issues denominated in dollars and euros. The scale of lending surpasses the previous record of $26 billion raised in the same period of 2018, Morgan Stanley data shows.
All sales had subscriptions at least three times higher, a sign that appetite for emerging market debt is back after a year in which many countries were effectively barred from entering markets due to rising global interest rates.
Saudi Arabia is the biggest borrower so far, having sold $10 billion in five-, 10- and 30-year bonds.
High-income countries have also joined the momentum. Turkey sold $2.75 billion worth of Eurobonds at a 9.75% yield on Thursday, while Mongolia is also expected to explore the markets.
Year-to-date issuance is already equivalent to 40% of all emerging market issuance of hard-currency bonds in 2022, said Simon Waever, strategist at Morgan Stanley.
While emerging bond markets got off to a roaring start, that may not translate into a bumper year overall.
Morgan Stanley forecasts total gross sales of sovereign debt in 2023 to reach $143 billion, driven by sales from the Middle East and North Africa and investment-grade countries in Asia. That’s well above last year’s $95 billion mark, but well below the 2020 record $233 billion.
Source: CNN Brasil
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