The euro crisis is over. At least, that’s what the market appears to believe. Yields across the eurozone’s embattled periphery have fallen to levels not seen in nearly a decade, while rating agencies are starting to take a more positive outlook towards peripheral countries, citing progress in fiscal and economic reform.
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Italy, the eurozone’s largest swap user, is keen to push through sweeping reforms to its derivatives laws but is besieged by delays. Other European countries have made more progress, while some are refusing to budge at all.
It has been a roller-coaster decade for Robert Stheeman at the UK’s Debt Management Office as the financial crisis has put a massive strain on the public finances. He tells IFR how he plans to handle the challenges as deficits start to fall.
If the reaction of the debt markets is anything to go by, both Spain and Portugal are well on the road to recovery, as investors swamp new issues and yields drop drastically.
Talk about a shift in sentiment. Investors who were running the other way when eurozone borrowers wanted to do deals just a few years ago now can’t get enough of the stuff.
The Kangaroo market is coming into its own. The deep investor base provided by superannuation funds generates a natural bid for SSA paper and is simply too big to ignore.
Green bonds are sprouting up everywhere and corporates are now putting down roots in the market.
The development bank is held in near-universal respect by those in Latin America who use its services and those in the region and the wider world who lend it money.
As the economic recovery gathers steam, expectations of rising interest rates have pushed up sovereign bond yields. But the varying speeds of rebound across the developed world have led to a divergence in yields. What are the implications for investors in sovereign debt?
“Greece is back”, said the country’s PM in the aftermath of a successful sale of five-year bonds. Perhaps. But it is only back on a long road to rehabilitation.
Ballooning European sovereign indebtedness, higher capital requirements for banks and the demise of the traditionally crucial insurance-backed funding model have created a vacuum in the infrastructure financing market. Capital markets have long been seen as the natural source of funding if the right instruments could be developed. Will the EIB’s new project bonds help that vision be realised?