Coronavirus Adds to Problems for Emerging Market Bonds

Posted on April 15th, 2020 at 3:15 PM
Coronavirus Adds to Problems for Emerging Market Bonds

From the Desk of Jim Eccleston at Eccleston Law LLC:

The financial fallout from the Coronavirus pandemic has been widespread, and now threatens emerging markets.  Emerging market bonds have seen a withdrawal of capital, and now some of the emerging markets are at risk of default.  The pandemic is just one of a number of circumstances that have combined to push these bonds to the edge of default. Additionally, declining oil prices and an increase in the strength of the US dollar has contributed to this issue.  

Some emerging market bonds are now trading at distressed levels. For example, the yield on some dollar-denominated Angolan government bonds jumped from under 7% to almost 30%.  The yield for some dollar-denominated Nigerian bonds jumped from 4% to nearly 12%. There were 16 other countries whose bonds were also trading at distressed levels. In addition to Angola and Nigeria, Ghana and Zambia were among the countries most vulnerable to a default. 

The problems are not limited to Africa. Venezuela, Argentina, Ecuador and Lebanon had already begun defaulting on foreign bonds prior to the start of the pandemic.  

Emerging market bonds had been growing in popularity. In 2019, emerging markets borrowed an estimated $122.6 billion by way of sovereign dollar-denominated bonds.  That mark is roughly double the amount borrowed in 2009.  

Those with questions concerning emerging market bonds should contact Eccleston Law.

The attorneys of Eccleston Law LLC represent investors and advisors nationwide in securities and employment matters. The securities lawyers at Eccleston Law also practice a variety of other areas of practice for financial investors and advisors including Securities FraudCompliance ProtectionBreach of Fiduciary DutyFINRA Matters, and much more. Our attorneys draw on a combined experience of nearly 65 years in delivering the highest quality legal services. If you are in need of legal services, contact us to schedule a one-on-one consultation today.

Related Attorneys: James J. Eccleston

Tags: eccleston, eccleston law, james eccleston, coronavirus, market bonds, pandemic

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