Argentina’s recently issued century bond deal was unexpected in terms of timing and maturity. Century bonds in Emerging Markets (EM) are rare (we think the table below is pretty exhaustive) and they grab the headlines, especially when issued by a credit that has defaulted many (many) times, like Argentina.
Are century bonds that much risker?
Despite US rate hikes in December, March and another last week, the US dollar has depreciated back to pre-election levels. All of the Trumpflation dollar premium has disappeared. As the Trump dollar trade appears to have run out of steam, the Euro has however been climbing. Optimism around the Euro area growth comeback grew leading up to the ECB meeting earlier this month, with EUR/USD hittin…
Read the articleA hiking Fed has caused trouble for Emerging Markets in the past; will history repeat itself? Also, we touch on two things from the Fed meeting that are more interesting than the actual hike itself.
Tune in for the latest edition of BVTV, where Fund Manager Claudia Calich joined me to discuss how she has positioned her EM debt portfolios for the second half of the year.
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1. The ECB can act quickly when considering if a bank has reached the point of non-viability (PONV), and enacting a resolution plan. The speed with which regulators acted clearly took the market by surprise. At the same time, how the regulator determines a bank to be non-viable is still a grey area (considering the situation around some of the weaker Italian banks).
2. EU stress tests are not…
Read the articleWhile last week ended with British prime minister Theresa May promising to provide ‘certainty’ after yet another shock election result, for markets, the opposite looks likely to be true. And with the renewed uncertainty of a hung parliament likely to prove unhelpful in upcoming Brexit negotiations, what implications can markets draw for UK growth prospects and the likely direction of gilts? Tun…
Watch the videoThe UK has a hung parliament, with Theresa May’s Conservative Party losing seats and likely ending up 8 short of an overall majority. It looks as if young people voted in large numbers, mainly for Jeremy Corbyn’s Labour Party. The Conservatives remain the single largest party however, and together with the Conservative-leaning DUP on 10 seats, they will likely form the new government. The Pr…
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A couple of weeks ago, state-owned International Bank of Azerbaijan (IBA) shocked its bondholders by announcing a surprise restructuring. The bank’s capital ratio turned negative at year-end 2016 due to large currency losses as a result of the depreciation of local-currency Manat (AZN). The International Bank of Azerbaijan bonds (IBAZAZ) 5.625% 2019 bonds were trading above par and dropped by 1…
Read the articleAccording to recent reports, leading foreign football players in the English Premier League are looking to get paid in euro rather than sterling. Since the UK referendum result in June last year, sterling has fallen by 12% against the euro, so it is unsurprising to see that some players have questioned the denomination of their salaries. It is not the first time that global stars have asked to …
Read the articleAre we seeing the end of the Trump trade and, if so, is the Macron trade the new game in town? Join us for this morning’s BVTV, where Stefan Isaacs and I discussed whether the reflation trade has been superseded by Europe’s ever-improving outlook?
Also: what to watch for on the markets this week.
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With the UK’s vote for Brexit, Trump’s election, and the rise of Le Pen in France, it feels as if there is a backlash against the “Washington Consensus” and globalisation. Stephen King, economic adviser at HSBC has made this the topic of his latest book, “Grave New World: the end of globalisation, the return of history”.
In this short video, the latest in our series of interviews with authors …
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