Emerging markets face tough year

viernes 9 de enero de 2015 11:15 GYT

* Threat of corporate defaults weigh on the market

* Sovereigns at risk of downgrades

* Corporate issuance to compensate for drop in sovereign volumes

By Sudip Roy

LONDON, Jan 9 (IFR) - Emerging markets are beginning 2015 with the gravest risks threatening the asset class since the height of the financial crisis.

Headwinds range from the political and economic crises in Russia and Ukraine to troubles at Brazilian state-owned oil company Petrobras and Chinese property firm Kaisa to the slide in commodity prices generally, and oil specifically.

Then there are more technical issues that could lead to periods of volatility for emerging markets bonds, in particular rising US rates and a strong US dollar.

"It's going to be one of the toughest years we've had," said one emerging markets debt capital markets banker in London.

One problem area, according to analysts, is EM corporates. "The combination of declining commodity prices and rising sovereign risks, especially in Russia and Brazil, threatens to derail what has been a five-year-long trend of improving credit, portfolio inflows and declining credit spreads," said Citigroup analysts in a report published earlier this week entitled Not a Happy New Year for EM Corporates: Defaults Ring in 2015, and Downgrades May Be Ahead.   Continuación...