Amidst emerging bond rally, African governments must pay up to sell debt

martes 9 de agosto de 2016 10:50 GYT

By Karin Strohecker

LONDON Aug 9 (Reuters) - Emerging dollar-bond markets have been on a roll in recent months thanks to investors hunting for returns, but Ghana's failure to place its issue shows investors are willing to drive a hard bargain when it comes to weak junk-rated credits.

Hard-currency debt issued by riskier and less developed countries has been one of the best performing asset classes so far this year, yielding more than 13 percent in dollar-terms since the start of the year.

Emerging debt funds have just posted their largest five-week inflow on record, amounting to $16.6 billion, Bank of America Merrill Lynch estimated last week.

In theory, that ensures a sweet spot for emerging market issuers looking to raise money, as global investors saddled with more than $10 trillion of negative-yielding developed world bonds vie for exposure to higher yielding assets.

But not everyone has managed to cash in. Having expected to raise up to $1 billion after a well-attended roadshow last week, junk-rated Ghana decided to pull its issue after investors demanded a double-digit yield.

"I see it as a good thing. This shows buyers have really done their research and are not being undiscriminating," said JC Sambor, deputy-head of emerging market fixed income at BNP Paribas Investment Partners.

"Also on the issuer side, they can decide if they want to delay. The fact that they have this security shows the market can be a bit frothy but is not on the bubble side."

Ghana failed to place its bond even though money managers are desperate to invest the cash that is pouring into their emerging market funds.   Continuación...