Ecuador seizes chance in risk-on market
By Paul Kilby
NEW YORK, July 29 (IFR) - In a sign that some see as marking the top of a frothy market, Ecuador returned with a US dollar bond this week as the troubled nation took advantage of a strong backdrop to garner much-needed funding.
After sitting on the sidelines since completing roadshows in April, Ecuador finally seized its chance to sell a five-year bond into a risk-on market.
Lower oil prices and the failed coup attempt in Turkey have not slowed the hunt for yield in emerging market assets - much to the benefit of shakier credits seeking hard-currency funding.
Earlier in July, Brazil priced a 30-year bond tighter than the yield it achieved on a 10-year just four months ago, while this week Trinidad & Tobago locked in a 4.5% yield for 10-year money despite the threat of a downgrade to below investment grade.
Investors have stampeded into emerging markets in July, with fund trackers EPFR and Lipper announcing record weekly inflows into the asset class.
"The new inflows coming into the market may explain why Ecuador went well," said Klaus Spielkamp, head of fixed income sales at Bulltick, a brokerage and asset manager focusing on Latin America.
"I have been receiving calls from clients needing to put money to work and asking what pays. It is a common request."