The Bond Market Just Sent a Disturbing Message

As this article by Bloomberg reports there is reduced interest in the long maturity benchmark US bonds. This is bad news for the $52 trillion sovereign debt market and its EM section in particular. Investors seem wary of putting their money in long-term instruments, thus the maturities sovereigns will need to offer are shorter and shorter. This may create a debt spiral where EM governments will find themselves in a particularly fragile situation – similar to 1998 with a high price for refinancing and low fiscal flexibility.

Deriveum is a new type of collateral that brings back certainty to the CDS market. utilizing Deriveum will allow all parties – issuers, investors and counterparties to benefit from reduced risks. Deriveum is particularly suitable for EM sovereign bonds and distressed debt.

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