Bond market thaw offers hope to emerging market borrowers
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Bond investors are warming to a host of countries locked out of international markets for the past two years, raising hopes that a debt crisis in the developing world may be starting to ease.
Article originally published by The Financial Times. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.
Published by
26 Jan 2024
A global bond rally over the past two months, in anticipation of interest rate cuts in the US and other big economies, has swept up riskier debt as investors seek higher returns.
The resulting fall in borrowing costs has helped to pull countries out of debt distress, commonly defined as a dollar-borrowing cost more than 10 percentage points higher than that of US Treasuries, which in effect bars a government from issuing new debt.
Ten nations — Angola, Egypt, El Salvador, Gabon, Iraq, Kenya, Mongolia, Mozambique, Nigeria and Tajikistan — have now seen their borrowing spreads fall below this threshold since 2022.
That raises the prospect that more developing countries will be able to refinance their debt with fresh borrowing rather than joining the raft of economies that defaulted in the wake of the Covid-19 pandemic.
“It is looking better overall,
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