EM sovereign bond issuance rises in September, though likely not a post-Fed bounce
S&P 500 index little changed
U.S. 10-Year Treasury yield rises to ~3.79%
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EM SOVEREIGN BOND ISSUANCE RISES IN SEPTEMBER, THOUGH LIKELY NOT A POST-FED BOUNCE
Issuance of hard currency sovereign bonds in emerging markets rose for the second straight month in September, its biggest monthly advance since May, though not as much as investors would have hoped following the Federal Reserve's interest rate cut.
Issuance stood at $15.2 billion last month, a 51% increase year-over-year and a 32% jump compared to August, according to Tellimer calculations. Cumulative issuance stands at $137 billion year-to-date, 47% higher compared to the same period in 2023.
The bulk of issuance came from investment grade (IG) sovereigns, amounting to 77%, coming from five issuers, namely China, Hungary, Indonesia, Romania and Uruguay.
China early in September said it would issue up to 2 billion euros ($2.2 billion) of sovereign bonds in Paris on Sept. 23, its first euro issue in three years, while Romania issued for the fourth time this year, bringing its yearly total to $17 billion.
The remaining 23% comprised of high yield (HY) issues from sole issuer Turkey.
"We haven't seen the surge in issuance, and especially HY issuance, that some may have expected after the US Fed started its easing cycle last month, although it is still early days," noted Tellimer's chief economist & head of fixed income research Stuart Culverhouse.
Year-to-date, IG issuance amounts to $101.1 billion, 60% higher than in the same period last year. HY issuance amounts to $32.2 billion, 27% higher than last year.
Nominal yields fell below 7% last month to close at 6.79%, as per Tellimer calculations on an index level, down 43 bps on the month and 80 bps since their August high, to their lowest level since April 2022.
The country risk premium closed the month at 296 bps, down 26 bps on the month and 75 bps since their August highs.
(Shashwat Chauhan)
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EM hard currency sovereign bond issuance by month https://tmsnrt.rs/3ZIms6l
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