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☆ India's Adani still eligible to be part of influential JPMorgan bond indexes
▼ + stars: | 2023-02-07 | by ( ) www.reuters.com time to read: +2 min

SINGAPORE, Feb 7 (Reuters) - India's Adani group of companies, which in recent weeks has seen a brutal selloff in its bonds and shares after being targetted by a U.S. short-seller, is still eligible for inclusion in JPMorgan's influential bond indexes, the bank said in a note. Adani, whose business interest includes ports, power generation and transmission, and renewable energy, has a total notional value of $7.7 billion in the JPMorgan's CEMBI and JACI indexes, the bank said on Monday. JPMorgan Corporate Emerging Market Bond Index series (CEMBI) tracks dollar debt issued by emerging market corporations, while its Asia Credit Index (JACI) tracks the total return performance of the Asia fixed-rate dollar bond market. After the release of Hindenburg's report, Adani's weight has decreased by 10 basis points to 36 basis points in the CEMBI Broad Div index and by 15 basis points to 48 basis points in the CEMBI Broad Div IG index, the JPMorgan note said. The Indian conglomerate's weight decreased by 16 basis points to 52 basis points in the JACI index, it added.

☆ Central bank test lab to trial 'stablecoin' monitoring system
▼ + stars: | 2023-02-07 | by ( Marc Jones | ) www.reuters.com time to read: +2 min

LONDON, Feb 7 (Reuters) - A global central bank test lab run out of London is designing a 'stablecoin' monitoring system aimed at giving authorities a clearer picture on how they work and how to regulate them in future. Stablecoins are a type of cryptocurrency which aim to maintain a 1:1 peg with a fiat currency such as the dollar. The collapse last year of a widely-used stablecoin pair, Luna and TerraUSD, sparked widespread turmoil in crypto markets. In a bid to ensure there is more oversight going forward, the Bank for International Settlements (BIS), often dubbed the central bank for the world's central banks, is to begin work in its London 'innovation hub' on a tool to keep tabs on them. "Most central banks lack tools to systemically monitor stablecoins and avoid asset-liability mismatches," the BIS said.

☆ New look CBDCs and cryptomarket to emerge from turmoil, top BIS official says
▼ + stars: | 2023-02-06 | by ( Marc Jones | ) www.reuters.com time to read: +4 min

LONDON, Feb 6 (Reuters) - Cryptomarkets have not been killed off by last year's turmoil, while the new wave of central bank digital currencies will face geopolitical limits, the Bank for International Settlements' new innovation head has predicted. Dubbed the central bank to the world's central bank, the BIS has long been critical of cryptocurrencies, likening bitcoin to both a ponzi scheme and market bubble in the past. Since the start of 2023, however, there has been something of a rebound, including a 40% recovery in bitcoin's price. The European Central Bank should get the go-ahead for full-scale tests. "We will never have full interconnectedness," Skingsley said, adding though that the BIS' work aimed to make CBDCs as versatile as possible.

"I can't imagine Pakistan not going on a back-to-back IMF programme." Pakistan's debt problemsPrime Minister Shehbaz Sharif’s main election challenger is former cricket star Imran Khan, who was removed from the job last April but retains popularity. "There is just a long-term indebtedness problem," said Jeff Grills, the head of emerging markets debt at Aegon Asset Management, who held Pakistan bonds until the floods hit. Most of Pakistan's bonds are still trading at less than half their face value. Reuters GraphicsDIFFICULT TIMESSuch a restructuring of Pakistan's bonds would represent its first international default since 1999, according to the Bank of Canada-Bank of England Sovereign Default Database.

[1/2] Men walk past an electric board displaying Nikkei and other countries' indexes outside a brokerage in Tokyo, Japan January 16, 2023. After $14 trillion was wiped off world shares in 2022, $4 trillion has been added back this month. "Markets are in this Goldilocks-scenario of OK growth, slowing inflation and softer monetary policy," said Richard Dias, founder of London-based investment consultancy Acorn Macro. Major central banks have added almost 3,000 basis points to global borrowing costs in this tightening cycle to date. "We've had a monumental rally in government bonds based on expectations we've reached the peak in interest rates," he said.

JOHANNESBURG, Jan 30 (Reuters) - Nigeria's government bonds fell heavily on Monday after ratings agency Moody's downgraded the West African oil producer late on Friday to Caa1 from B3, saying the government's fiscal and debt position was expected to keep deteriorating. Longer-dated bonds were down the most, with the dollar-denominated 2051 Eurobond falling more than 2.8 cents in the dollar to 68.758 cents according to Tradeweb data . Nigeria's bonds had outperformed other African and emerging market issuers over the last six months, according to JPMorgan. "Immediate default risk is low, assuming no sudden, unexpected events such as another shock or shift in policy direction," Moody's added. Moody's said it expects just the interest payments on Nigeria's debt to take up about half of the government's revenue in the medium term, up from 35% in 2022.

South Africa has been struggling for years to overhaul its state-power company which is plagued by corruption and mismanagement and reeling under a 400 billion rand ($23.3 billion) debt pile. Finance Minister Enoch Godongwana told Reuters last week he was "sharpening his pencil" to provide details, so far scarce, for taking on between one- and two-thirds of Eskom's debt in his Feb. 22 budget presentation. Eskom's debt pile is not just big, it is also complex. Another 15% is international bonds, held by global asset managers such as PIMCO, BlackRock and Fidelity, according to recent filings. Eskom's international bonds could rally if the government takes on two-thirds of the debt, Wolman said, while limiting that to one third or carrying out the debt transfer over a long period of time could be negative.

As Africa struggles with economic headwinds caused by the COVID-19 pandemic, the war in Ukraine and, notably, Washington's own monetary policy, Africans are asking for proof the United States will stay the course this time. African countries have become collateral victims of this year's rate hikes by the U.S. Federal Reserve, aimed at curbing inflation at home. African countries are also finding it harder to access capital markets to meet their fiscal needs and refinance maturing debt. The United States, meanwhile, has largely failed to offer viable alternatives to cheap Chinese credit, officials said. One senior U.S. Treasury official said the United States had long been engaged in Africa, funding anti-HIV work and working on other health issues.

☆ Cuba begins London court battle over unpaid Castro-era debt
▼ + stars: | 2023-01-23 | by ( Marc Jones | ) www.reuters.com time to read: +2 min

[1/3] Students hold images of the late Cuban President Fidel Castro during an event commemorating the five year anniversary of his death, in Havana, Cuba, November 24, 2021. REUTERS/Alexandre Meneghini/File PhotoLONDON, Jan 23 (Reuters) - Cuba began a high-stakes legal battle in London's High Court on Monday over unpaid Fidel Castro-era government debt now held by one of the communist-run country's creditors. CRF originally launched the claim almost three years ago after Havana refused a debt relief offer made by CRF and some other bond holders back in 2018. But having not dealt with its commercial creditors in the so-called London Club the country remains shut out of international capital markets. ($1 = 0.9210 euros)Reporting by Marc Jones and Sam Tobin; Editing by Frank Jack DanielOur Standards: The Thomson Reuters Trust Principles.

☆ Ethiopia deputy finmin: rumour of FX devaluation "completely unfounded"
▼ + stars: | 2023-01-19 | by ( Rachel Savage | ) www.reuters.com time to read: +2 min

"There is widespread rumour that devaluation is in the making. loading"A sensible macro reform is always our agenda but there should not be any concern about mere devaluation." Ethiopia currently operates a managed exchange rate for the birr, allowing it to depreciate gradually against the dollar. In 2020, the IMF recommended moving to a market-clearing exchange rate regime, to deal with an overvalued currency and FX shortages. "So the exchange rate unification remains one important policy goal, but we are just doing it gradually."

Zambia has become a test case for the G20-led 'Common Framework' restructuring vehicle launched during the COVID-19 pandemic, but differences with some of its main creditors about the debt relief required means progress has been slow. Its vast swathes of national parks are home or migration routes for some of Africa's most impressive wildlife including lions and elephants. "We will be considering all debt restructuring options that are in the framework (G20 Common Framework)which falls within the DSA (debt sustainability analysis) parameters... and that are acceptable to all parties," the ministry's response added. KAZA conservation areaCOMMON FRAMEWORKWWF's Zambia country head, Nachilala Nkombo, told Reuters that the most recent talks with the government took place last month. Sri Lanka, another Common Framework restructuring country, has said that it would like to do a debt-for-nature swap and with Zambia still hoping to wrap up its deal this year it would likely set a precedent.

[1/4] Turkish President Tayyip Erdogan and Central Bank Governor Sahap Kavcioglu are pictured during a signing ceremony in Ankara, Turkey, June 8, 2022. But his drastic transformation of the economy and financial markets means such a change would bring its own uncertainties. The election will also determine what role regional military power and NATO member Turkey plays in conflicts in Ukraine, where Erdogan has helped broker talks, and in neighbour Syria. In the short-term it seems to have worked however, halting a years-long rise in Turks converting lira into dollars. Last week, Turkey had no problem borrowing $2.75 billion from international capital markets.

☆ Analysis: China's rapid reopening brings joy and woe for world markets
▼ + stars: | 2023-01-13 | by ( Yoruk Bahceli | ) www.reuters.com time to read: +6 min

The impact of the reopening of the world's second largest economy on financial markets, hit by double-digit losses last year as inflation and interest rates jumped, is critical. Being touted among the top buying bets on recovery hopes are emerging markets, commodity currencies, oil, travel and European luxury companies. The boost to world growth from China's reopening was expected to hurt the safe-haven dollar but benefit the euro. INFLATION CAUTIONBut a boost from China's reopening raises some concerns about inflation. China is the world's leading importer of oil and many other commodities -- oil prices have risen 10% since mid-December to almost $84 .

☆ Rebounding EM stocks pass "bull market" threshold
▼ + stars: | 2023-01-09 | by ( ) www.reuters.com time to read: +1 min

LONDON, Jan 9 (Reuters) - Fast-charging emerging market stocks were entered so-called "bull market" territory on Monday, as another China-driven surge in Asia's biggest bourses pushed MSCI's main EM index 20% above its last major trough back in October. The MSCI Emerging Markets Index (.MSCIEF), which jumped 2.4% in its fifth straight sessions of gains on Monday, covers 24 countries and almost 1,400 firms. Chinese stocks, which account for a third of the MSCIEF index and far more when China-focused firms listed elsewhere are included, have surged almost 45% since the lows. Taiwanese stocks and South Korean stocks which have respective 13.8% and 11.3% MSCIEF weightings have also jumped roughly 18% and 20%. Reuters GraphicsReporting by Marc Jones; Editing by Hugh LawsonOur Standards: The Thomson Reuters Trust Principles.

☆ Egypt's currency weakens more in wake of latest devaluation
▼ + stars: | 2023-01-05 | by ( Patrick Werr | ) www.reuters.com time to read: +4 min

The pound closed at 27.11 per dollar, according to the central bank, after fluctuating more than usual. Currency flexibility was a key component of the 46-month, $3 billion financial IMF package. After the central bank allowed the pound to depreciate sharply last March and October, it soon resumed trading within a band, moving only about 0.01 pounds per dollar per day. Egypt's pound and bondsHUGE BACKLOGDespite last year's devaluations a shortage of foreign currency has continued to hamper imports in recent months. Deutsche Bank said in a note that Wednesday's devaluation and an interest rate hike by the central bank last month "clearly show an approach to re-attract (structural) foreign inflows into local markets".

Reuters Graphics3/ RE-EMERGING MARKETSWhisper it, but the emerging markets (EM) bulls are back after 2022 delivered some of the biggest losses on record. Credit Suisse particularly likes hard currency debt and DoubleLine's Jeffrey Gundlach, AKA the "bond king", has EM stocks as his top pick. Economists polled by Reuters expect headline U.S. inflation to decelerate to 3.1% by the end of 2023. Valentine Ainouz, fixed income strategist at the Amundi Institute, predicts the 10-year U.S. Treasury yield will end 2023 at 3.5% from around 3.88% currently. Reuters Graphics5/ EQUITIES: SELL NOW, BUY LATEREquity investors hope a V-shaped year for the global economy will see stocks end it comfortably higher.

☆ Market misery deals sovereign wealth funds historic setback in 2022 -study
▼ + stars: | 2023-01-01 | by ( Marc Jones | ) www.reuters.com time to read: +3 min

SummarySummary Companies Assets managed by sovereign wealth funds fell nearly 8%Assets of public pension funds dropped almost 6%LONDON, Jan 1 (Reuters) - Heavy falls in stock and bond markets over the last year have cut the combined value of the world's sovereign wealth and public pension funds for the first time ever - and to the tune of $2.2 trillion, an annual study of the sector has estimated. The report on state-owned investment vehicles by industry specialist Global SWF found that the value of assets managed by sovereign wealth funds fell to $10.6 trillion from $11.5 trillion, while those of public pension funds dropped to $20.8 trillion from $22.1 trillion. Despite all the turbulence though, the money funds spent buying up companies, property or infrastructure still jumped 12% compared with 2021. A record $257.5 billion was deployed across 743 deals, with sovereign wealth funds also sealing a record number of $1 billion-plus "mega-deals". Two months later, Italy's CDP Equity wealth fund spent $4.4 billion on Autostrade per l’Italia alongside Blackstone and Macquarie.

☆ How 2022 shocked, rocked and rolled global markets
▼ + stars: | 2022-12-30 | by ( Marc Jones | ) www.reuters.com time to read: +6 min

The main drivers have been the war in Ukraine, combined with rampant inflation as global economies broke out of the pandemic, but China remained shackled by it. U.S. Treasuries and German bonds, the benchmarks of global borrowing markets and traditional go-to assets in troubled times, lost 17% and 25% respectively in dollar terms. Ten-year Treasury yields jumped to 1.8% from less than 1.5%, knocking 5% off MSCI's world stocks index (.MIWD00000PUS) in January alone. The Fed has delivered an eye-watering 400bps of rate hikes and the European Central Bank, a record 250bps, despite saying this time last year it was unlikely to budge. "What has gone in global markets this year has been traumatic," said EFG Bank Chief Economist and ex-Deputy Governor of Ireland's central bank, Stefan Gerlach.

☆ Bank floats $10 bln Brazilian bond plan to halt Amazon deforestation
▼ + stars: | 2022-12-19 | by ( Marc Jones | ) www.reuters.com time to read: +3 min

LONDON, Dec 19 (Reuters) - Strategists at a UK bank have proposed the idea of a super-sized $10 billion Brazilian government bond that would be specifically designed to help halt the destruction of the Amazon rainforest. Stopping deforestation of the Amazon, which absorbs vast amounts of planet-warming greenhouse gas, is part of Brazilian President-elect Luiz Inacio Lula da Silva's sweeping plan to reclaim leadership on climate change measures. Money raised via sustainability-linked debt can be used for almost any purpose. "As a reference, a 2034 Brazilian bond is currently yielding around 6.35%, making the step up/down feature potentially financially material for Brazil," Vivanco's initial outline of the plan last week said. "If Lula goes around the world selling this bond, you would have to have a reason not to be part of it," Vivanco said.

The cedi has lost more than 50% of its value this year , pushing up the cost of Ghana's external debt. Interest payments alone absorb between 70 and 100% of the government's revenuesHOW BIG IS GHANA'S DEBT? Ghana's public debt was 467.4 billion cedis ($37.4 billion) in September, of which 42% was domestic debt, according to the most recent central bank figures released last month. Ghana's debt-to-GDPWHO OWNS GHANA'S DEBT? The fund is yet to comment on Ghana's debt sustainability or domestic bond exchange plans.

☆ Stocks, oil struggle to pull out of four-day slide
▼ + stars: | 2022-12-08 | by ( Marc Jones | ) www.reuters.com time to read: +6 min

Germany's 10-year bond yield , seen as the benchmark borrowing cost for the bloc, circled around 1.795% for most of the morning having hit a two-month low of 1.788% on Wednesday. The yield on 10-year Treasury notes was up fractionally at 3.453%, while yield on the 30-year Treasury bond inched up to 3.445%. Hong Kong's Hang Seng Index climbed more than 3% while China's tech giants Alibaba and Meituan (3690.HK) jumped 6% each. Among the main commodities, oil found its footing after a four-day drop that had taken it into the red for the year. Additional reporting by Harry Robertson; Editing by Arun Koyyur and Angus MacSwanOur Standards: The Thomson Reuters Trust Principles.

☆ Ukraine's Naftogaz says Russian attacks damaged 350 gas facilities
▼ + stars: | 2022-12-07 | by ( ) www.reuters.com time to read: +1 min

Companies NAK Naftohaz Ukrainy PAT FollowLONDON, Dec 7 (Reuters) - Recent Russian attacks on Ukraine have damaged 350 natural gas facilities in the country though production should be largely restored by year-end, Oleksiy Chernyshov, chief executive of Ukrainian state energy company Naftogaz said on Wednesday. Speaking at an event of the European Bank for Reconstruction and Development, Chernyshov said the loss of gas production capacity amounted to a value of around $700 million. "We all understand that the energy is another weapon...and we've been seriously attacked by Russian missiles in some part of our infrastructure and gas production infrastructure has been hit." Chernyshov, who was appointed in early November, said getting the firm out of default was another of his priorities. Naftogaz tipped into a messy default in July, becoming the first Ukrainian government entity to do so since the start of the Russian invasion on Feb. 24.

☆ ECB to hike again but "very close" to neutral rates - Herodotou
▼ + stars: | 2022-12-06 | by ( Marc Jones | ) www.reuters.com time to read: +1 min

LONDON, Dec 6 (Reuters) - European Central Bank interest rates will go up again but are now "very near" their neutral level, ECB policymaker Constantinos Herodotou said on Tuesday. "We are very near the neutral rate. There will be I think another hike or hikes," Herodotou, Cyprus' ECB Governing Council member, told a Bloomberg event. Having raised rates by a combined 200 basis points since July, the ECB is expected to hike by another 50 basis points on Dec 15, slowing the pace of policy tightening after back-to-back 75 point moves. "There will be more rate hikes to contain inflation," Herodotou said.

☆ BIS warns of $80 trillion of hidden FX swap debt
▼ + stars: | 2022-12-05 | by ( Marc Jones | ) www.reuters.com time to read: +5 min

LONDON, Dec 5 (Reuters) - The Bank for International Settlements (BIS) has warned that pension funds and other 'non-bank' financial firms now have more than $80 trillion of hidden, off-balance sheet dollar debt in the form of FX swaps. Its main warning though was what it described as the FX swap debt "blind spot" that risked leaving policymakers in a "fog". FX swap markets, where for example a Dutch pension fund or Japanese insurer borrows dollars and lends euro or yen in the "spot leg" before later repaying them, have a history of problems. For both non-U.S. banks and non-U.S. 'non-banks' such as pension funds, dollar obligations from FX swaps are now double their on-balance sheet dollar debt, it estimated. Market volatilityDINO-MITEOther sections of the report focused on findings from its recent global FX market survey.

☆ S&P warns of possible trebling of U.S., European default rates
▼ + stars: | 2022-12-01 | by ( ) www.reuters.com time to read: +1 min

LONDON, Dec 1 (Reuters) - Credit rating firm S&P Global has warned that speculative-grade U.S. and European corporate default rates are likely to double and might even treble next year as rising borrowing costs take their toll. The firm estimated that the "trailing-12-month default rates" in the U.S. and Europe would reach 3.75% and 3.25% respectively by September, more than double the 1.6% and 1.4% in September 2022. With so much depending on the length, breadth and depth of a potential global economic downturn, however, S&P added that "pessimistic forecasts for default rates of 6.0% and 5.5% aren’t out of the question". "We expect credit ratings to deteriorate, as credit fundamentals - for many corporates and some sovereigns - erode further", S&P's 2023 outlook report said. Reporting by Marc Jones; editing by Danilo MasoniOur Standards: The Thomson Reuters Trust Principles.

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