EM debt trading volumes slip 7% for third quarter: EMTA survey

By Rebecca Melvin

New York, Dec. 19 – Emerging markets debt trading volumes totaled $1.205 trillion in the third quarter, which was down 7% from the year-earlier period when EM debt trading volume was $1.299 trillion, according to the EMTA, an association for the emerging markets debt trading and investment industry.

“The aggregate volume drop is far from dramatic, and is consistent with the performance of assets and some outflows during the quarter,” BBVA LatAm strategist Alejandro Cuadrado said in the Wednesday EMTA release.

“The most recent sell-offs have tended to be moderate compared to previous corrections, as real money investors generally do not head for the exit in times of stress,” Cuadrado said.

While overall volume was down 7%, turnover in local markets instruments was up 7% at $791 billion for the third quarter.

Mexican bonds were the most frequently traded instruments both overall and in local markets debt, with $223 billion traded overall and $185 billion traded in local markets.

Mexican volumes represented 19% of overall volumes.

“In Mexico, the presidential election and its aftermath stirred markets and positions, and may continue to do so in coming months in what may be the most scrutinized market of 2019,” Cuadrado said.

Brazilian instruments were the second most frequently traded instruments in the EMTA report, at $163 billion, according to survey participants.

This represented a 14% increase on third-quarter 2017 volume of $143 billion.

“Brazil's underinvestment following years of outflows has led to some upside, and we'd expect volumes to continue to pick up into 2019 with more policy delivery,” Cuadrado said.

India and South Africa were also atop the list of frequently traded local instruments, with $94 billion and $85 billion traded, respectively.

Eurobond trading stood at $409 billion in the third quarter, which was down 26% from $553 billion in the third quarter of 2017. Sixty-one percent of eurobond activity involved sovereign debt issues.

The five most frequently traded eurobonds in the third quarter were Argentine, and included the Argentina bonds due 2026, 2048, 2028 and 2021 and the country’s U.S. dollar par bond.

EMTA’s survey includes trading volumes in debt instruments from over 90 emerging market countries, as reported by 44 financial firms.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.