Debt issued by less developed states plunges

JUNE saw the lowest issuance of debt in emerging markets since the end of 2008, as yields increase in other parts of the world, according to research by Thomson Reuters.

The amount of debt issued has been highly volatile in recent months, ranging from $1.62bn (£1.07bn) in June, to $65.12bn three months earlier.

The amount fell by 92 per cent from May alone, which was itself a notably poor month for issuances.

Borrowing costs for emerging market debt has risen in recent months, as bond yields rise for debt issued by advanced economies.

Bond yields have been depressed in many developed countries through the years since the financial crisis, but are now starting to rise back to levels seen prior to the crash.

The Indonesian central bank also raised its key interest rate from six per cent to 6.5 per cent yesterday, a day after Brazil’s central bank raised its own from eight per cent to 8.5 per cent. The Central Bank of the Republic of Turkey has also been intervening regularly in the foreign exchange market, selling $2.25bn of its reserves on Monday, followed by a $1.3bn sale on Wednesday, in an attempt to stabilise the lira, which is crumbling against other currencies.

Thomson Reuters also showed that Asian countries issued the largest share of debt, 36 per cent, followed by emerging market countries in Europe, with 30 per cent. Latin American holds 25 per cent, while 10 per cent is in the Middle East.