EMERGING MARKETS-Ukraine debt insurance costs soar, Latam assets sink

jueves 13 de febrero de 2014 11:44 GYT
 

By Asher Levine and Natsuko Waki

RIO DE JANEIRO/LONDON Feb 13 (Reuters) - Growing fears of a default pushed Ukraine's debt-insurance costs to four-year highs on Thursday, while concern over economic growth and inflation drove Latin American assets lower.

Higher U.S. Treasury yields also weighed on emerging markets, bringing losses in South Africa's rand, the Turkish lira, Russian rouble and Hungarian forint , some of the worst-hit currencies in the sell-off that began last month. Nigeria's currency rebounded, however, following a central bank intervention.

Concern has been growing over how Ukraine can prop up its currency and pay off its debt. Russia suspended a $15 billion bailout after Ukrainian President Viktor Yanukovich sacked his prime minister late last month.

"Ukraine is on the knife-edge of solvency risk," said Gabriel Sterne, an economist at broker Exotix.

The Ukrainian central bank brought in temporary currency controls last week after the hryvnia fell below 9 per dollar for the first time in five years. The bank said on Thursday controls may last longer than two weeks, as the currency continued to fall.

Investors were not convinced the central bank could continue to defend the hryvnia. The currency weakened further on Thursday, losing 1.5 percent against the dollar, and Ukraine's 5-year credit default swaps rose further, gaining 116 basis points from Wednesday's close to 1,241 bps, according to Markit.

Hungary's forint fell 0.8 percent to 311.75. Investors are watching inflation data due Friday for clues on whether rates will be cut again next week. Hungary's benchmark rate is already at a record-low 2.85 percent.   Continuación...