Country Risk Appetite – February 2005

The analysis from Standard Bank London:

Emerging market risk premia continue to contract across the spectrum. Borrowers are enjoying the lower spreads which have, to some extent, been offset by higher funding costs (certainly in US dollars).

Markets with higher volumes continue to be Turkey – where the spreads have, perhaps, seen the most dramatic contraction since the EU accession decision in December 2004 – Russia, Kazakhstan, Brazil and lately Argentina.

Argentina, which has now announced acceptance of its proposed debt restructuring, is expected to see a significant increase in deal flow as investors return – and for longer tenors too. Brazil continues to be seen at very low yields across the bank and corporate sector. Russian and Kazakhstan banks have been active in both the syndicated loan markets and trade facilities.

Asian Markets have been relatively quiet with some activity in Indonesia, Bangladesh, India and, of course, China.

No end is seen, in the near term, to the spread contraction which continues across all asset classes and borrower types.

For a PDF of tenors, click here