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Markets

Trading volumes in emerging hard-currency debt shrink 11pc in 2020

  • "The year was marked by the outbreak of Covid-19 leading to a sell-off in the financial markets and the dramatic contraction in economic growth around the globe," EMTA said in a statement.
  • "The adoption of expansive monetary policies and historically low US Treasury yields later encouraged capital flows into higher-yielding asset classes including EM."
Published March 29, 2021

LONDON: Emerging market hard-currency debt trading volumes suffered double-digit declines in 2020 year-on-year, latest data from the Emerging Markets Trade Association (EMTA) showed on Monday.

Eurobond trading stood at $2.034 trillion in 2020 - an 11% fall on 2019, the EMTA numbers showed. However, the share of trading in sovereign hard currency-denominated bonds rose to 63%, from 57% over the same period.

"The year was marked by the outbreak of Covid-19 leading to a sell-off in the financial markets and the dramatic contraction in economic growth around the globe," EMTA said in a statement.

"The adoption of expansive monetary policies and historically low US Treasury yields later encouraged capital flows into higher-yielding asset classes including EM."

Emerging markets suffered hefty outflows when the fallout from the coronavirus pandemic roiled global financial markets a year ago, though fixed income issued by developing market governments and corporates attracted investors again towards the end of 2020.

Looking at individual issues, four of the most frequently traded Eurobonds in 2020 were from Mexico - including sovereign bonds maturing in 2030, 2051 and 2032 - as well as Pemex's 2050 bonds, the most frequently traded EM corporate bond). Brazil's 2030 issue came fifth most traded.

Local market fixed-income instruments - which accounted for 59% of all debt trading volumes in emerging markets - recorded a turnover of $3.015 trillion in 2020, a 1% decrease on 2019.

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