Kuala Lumpur: Emerging market (EM) debt issuance will soften in 2021 from last year’s record highs, but will remain above the pre-pandemic levels as still-elevated funding needs and improving risk sentiment support overall bond market activity, Moody’s Investors Service said in a report Friday.
In its Sector In-Depth report titled ‘Emerging Markets – Global: Quarterly EM Issuance Monitor – January 2021’, it said EM debt issuers brought US$639 billion of eurobonds to market last year.
The amount exceeded the previous peak set in 2017, breaking the US$600 billion mark for the first time as high-rated issuers secured financing in the wake of the pandemic.
“In 2021, emerging markets volumes are unlikely to eclipse 2020 levels as a pick-up in gross domestic product (GDP) growth and commodity prices support revenue recovery and reduce emergency spending needs.
“However, historically-elevated budget deficits will still require significant funding,” said Moody’s senior vice-president and the report’s author, Rahul Ghosh.
The report also said improving global risk appetite and falling credit spreads would allow more non-investment grade issuers to access markets in the coming year, but noted that risks include a sudden jump in global inflation expectations, coronavirus containment challenges and concerns over rising EM debt burdens.
Issuers across larger emerging markets, notably China, had also benefited from strong local market appetite and liquid domestic capital markets to meet their financing needs, it said.
For more information about the report, subscribers can access the report at: http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1259843.
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