A $20 Billion Week Marks Market Reopening for EM Bond Sales

Emerging-market borrowers are piling back into global bond markets, selling about $20 billion in dollar notes in just a few days, all too aware that the window of opportunity may snap shut as suddenly as it opened.

Countries from Colombia to Indonesia and developing-nation companies rushed to lock in lower borrowing costs, taking advantage of a respite in conditions amid signals the Federal Reserve may be close to winding up its aggressive interest rate hikes. That, combined with cooling jobs growth in the world’s largest economy, helped bring down US Treasury yields from a 16-year high, allowing a swath of deals that have been on pause to come to market.

And with several sales — including Brazil’s long-awaited debut in ESG markets — still in the pipeline, this flurry of activity may be just the start of a new wave of issuance for developing-nation borrowers.

“It’s very good news for issuers and it’s very good news for portfolio managers,” said Jean-Charles Sambor, head of emerging markets fixed income at BNP Paribas Asset Management. “The bottom line is that it will alleviate the chances of additional outflows from emerging markets or potential rise in default because I think this market’s reopening should be positive for a very active primary pipeline going ahead.”

EM Borrowers Rush to Market to Sell Debt as US Rates Fall

Governments like Costa Rica, Indonesia and Bulgaria and companies including Colombia’s Grupo Energia Bogota and Korea National Oil Corp all issued hard-currency bonds the week ended Nov. 10, bringing the number of borrowers jumping at the opportunity to more than 30. Spearheaded by Colombia and Turkey — each of which sold $2.5 billion of dollar debt — the total deal size reached about $20 billion, the biggest for any week this year since February, according to data compiled by Bloomberg.