REFILE-EM suffers as big boys stay away
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By Sudip Roy and Paul Kilby
LONDON, Sept 25 (IFR) - The lack of a bellwether borrower is making it tougher for the emerging bond markets to find a support as issuers continue to struggle to sell deals.
In particular the US dollar primary market, the backbone of the asset class, has seen issuance volumes falter as a series of negative headlines, many of them emerging markets-inspired, has shaken confidence.
Although emerging markets spreads are performing no worse than US credit since oil began selling-off again in June, the horrible reverses in EM FX and local bond markets are engendering a view that the asset class is in crisis.
Historically, a well-renowned sovereign or national champion would issue during such times of stress to calm market fears, as Turkey did when it sold a 30-year note at the beginning of the year after a period in which many emerging markets credits had seen their curves get battered.
"The market needs to see a couple of deals come and perform a bit. So far, everything has been painful," said a senior emerging markets banker.
But Turkey and other previously stalwart issuers, such as Brazil, Petrobras and Gazprom are no longer in a position to stabilise the market.
"Beyond Mexico, I can't think who would be the 'banker' trade," said a syndicate official in London. Continuación...