In what amounted to the largest single day sale of emerging market bonds this year, Russia raised $7 billion yesterday through 10-year bonds while South Africa sold $2 billion in 12-year bonds. Both countries paid significantly more as rates globally have risen on talks of the Federal Reserve’s bond buying program being tapered.
Russian rates were 5.112%, compared with 4.5% on a similar issuance last year. For South Africa, a 6.06% yield was needed to draw in investors compared to only 4.665% coupon on a similar sale last year.
Dan Loeb's Third Point returned 11% in its flagship Offshore Fund and 13.2% in its Ultra Fund for the first quarter. For April, the Offshore Fund was up 1.7%, while the Ultra Fund gained 2.3%. The S&P 500 was up 6.2% for the first quarter, while the MSCI World Index gained 5%. Q1 2021 hedge Read More
Despite the higher rates however, the combined issuances are being viewed as a net positive as emerging market bond deals have slowed drastically since the taper talks began in May.
“It feels like the reopening of the emerging-market asset class, the main guys are coming back,” said Angus Halkett, emerging-markets fund manager at Stone Harbor Investment Partners, which manages $63.5 billion in assets.
Worth noting is that Armenia is set to tap the credit markets for the first time ever this month while Kenya is also planning a bond issuance by year’s end. With yields rising and many portfolio managers flush with cash, the emerging market bonds offer a formidable investment.