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Economics and Markets

Sri Lanka’s Central Bank Says the Government Can and Will Pay its Bills, but Investors Aren’t as Certain

The Sri Lankan government has gone on the defensive to counter market speculation about whether unaffordable debt levels and a rapid erosion of its economic fundamentals in the wake of the COVID-19 pandemic will lead to a default.

21 May 2020

Scotiabank Says Brazil’s Lessez-Fair Lockdown Could Bring Long-Term Pain for Short-Term Gain

As Brazilian retail sales surprise on the upside, analysts at Scotiabank warn that lack of a clear policy and lessez-fair domestic lockdown could lead to a long and difficult recession down the road.

20 May 2020

Mexico’s GAP Draws Down MXN1bn Credit Facility as Clouds Gather Over Aviation Sector

Mexico-based airport operator Grupo Aeroportuario del Pacífico (GAP) says it has drawn down a MXN1bn credit facility, with the proceeds used to keep capex up as the outlook on the aviation sector dims.

19 May 2020

Fitch Sees Record Sovereign Defaults in 2020

The severe shock from the coronavirus pandemic is likely to lead to a record spike in sovereign defaults as risks grow for countries with weak fundamentals and heavy exposure to commodities and tourism, according to Fitch Ratings.

15 May 2020

Barings Sees Buying Opportunity in Short-Dated EM Debt

Emerging market corporate debt spreads blew-out following a sharp selloff in March, but the effect on issuer yield curves is creating new opportunities to buy into short-dated corporate debt, according to Barings.

14 May 2020

EM Assets Torn Between Fundamentals Deterioration and Unprecedented Liquidity Injections – Barclays

As a tussle between deteriorating fundamentals on the ground and unprecedented liquidity support from global central banks and governments ensues, emerging market sovereign bonds are starting to stratify between larger “haves” and smaller “have-nots”, with few countries falling in between, according to analysts at Barclays.

14 May 2020

South Africa Details Rise in Government TB Auctions

The National Treasury announced a step-up in local currency borrowing in the form of South African Government Bills (SAGB) and inflation-linked bonds (ILB). But according to Peter Attard Montalto, Head of Capital Markets Research at Intellidex, additional government borrowing in the mid- to long-term may become unsustainable.

12 May 2020

Private Sector Deleveraging Required to Plug EM Current Account Deficits - IIF

As countries worldwide are forced to spend unprecedented amounts to counter the economic and health effects of COVID-19, fiscal and current account deficits are set to rise globally. Rocky market conditions mean most EM sovereigns will struggle to access external funding, however, leaving the local private sector to pick up the slack, according to a recent report from the Institute of…

7 May 2020

Emerging Market Debt Outflows Tapered Dramatically in April

Net emerging market debt outflows have dropped dramatically through much of April, but central bank backstops in investment grade developed market debt may limit how quickly EM bonds bounce back.

6 May 2020

Lebanese Political Parties, For Now, Agree to Approach IMF

Lebanon is a step closer on the path towards economic reform, as the government agrees to approach the IMF for support. Hezbollah finally withdrew their opposition to the country requesting funds from the multilateral, which could help the struggling economy, but other political spats risk delyaing the process.

5 May 2020

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