New World Order for Sovereign Debt

July 4th, 2009 in Breaking News, New World Disorder

WALL STREET JOURNAL

The financial crisis is forcing investors to look at the world through new eyes. A case in point: emerging-market government bonds. When emerging-market bond spreads tightened to record lows in 2006 and early 2007, it was seen as evidence that risk appetite had run too far. Having blown out following Lehman Brothers’ collapse, spreads are narrowing again — only this time, the balance of risks is no longer so stark.

The history of emerging-market sovereign debt has been littered with crises. The past decade or so alone has seen the Asian crisis, the Russian default and another round of restructuring in Latin America. Populist politics, poor fiscal management, a reliance on foreign-currency borrowing and fixed exchange rates were a magnet for trouble.

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New World Order for Sovereign Debt |