Wednesday, July 14, 2010
Spreads over US Treasuries, which measure the risk premium applied to emerging market bonds, have followed a similar course. Before the global crisis, they touched a record low in 2007 of just 148 basis points. They then soared in the turmoil to as high as 865bps in late 2008, but dropped back dramatically to 231bps this April. The recent retreat to safety has seen spreads widen, to 327 bps by yesterday. But by historic standards that is still low.
Not surprisingly, emerging market borrowers have taken advantage of these low yields, raising 10 per cent more in the first half of 2010 than in the same period in 2009, which was itself a record year.