Mean Streets: If the IMF were a cop, it would be the righteous Commissioner Gordon, desperately trying to maintain order in Gotham City while waiting for Batman to turn up.
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The IMF’s decision to help bail out Greece and other developed eurozone states irked many emerging countries. Getting out of Greece scar-free may be a challenge too and one that could indirectly change the Fund’s practices for the better.
China’s renminbi is close to winning its global colours as an IMF reserve currency – but recent market turbulence has not helped.
Political turmoil and a weak ringgit have hampered sukuk issuance from Malaysia this year, but demand for longer-tenor paper means that the outlook remains positive
India has long promised a primary debt market boom but little has been delivered. Still, there are pockets of hope in the infrastructure sector as new bond formats begin to emerge. Bank capital requirements, however, remain a challenge as the sector urgently needs consolidation and recapitalisation.
Despite a few instances of corporate default in China and strain at the local government financing vehicles, the will to avoid default and restructure debt where necessary means wide-scale default is unlikely.
Brazil’s dire economy and the fallout from the Petrobras scandal have left it clinging to its investment-grade status.
Russian corporates not subject to western sanctions are returning tentatively to the market as 2015 enters its final quarter. A few local debt sales have taken place but until investors jump back in, Moscow remains in trouble, unable to raise money to finance big industrial projects which the large energy-based corporates desperately need.
Political stalemate leaves debt market investors cold, after Turkey’s President called for fresh elections in November. Investors shout, scream, froth at the mouth, and then sink back, emasculated and unable to do anything.
It has been a torturous year for Greece, even by its own sorry standards, with the political climate becoming almost as desperate as the economic one. As Greeks prepare to vote for the third time in a little over a year on the future of their country, the hope is that the worst is now behind them.
Kiev and private creditors struck an unexpected deal to restructure US$18bn of the country’s debt, paving the way for a US$40bn IMF-led refinancing programme to be rolled out. But how much good will it do, given high debt, rising inflation, and conflict still raging in the east of the country?
Asia-based DCM bankers remain upbeat despite the global volatility, thanks to spreads having widened and the outlook for rates and credit remaining positive.
Regulation has combined with macroeconomic uncertainty to reduce liquidity in emerging market sovereign bonds, but this is fuelling a more proactive approach to order management on many trading desks.
Emerging market corporate debt issuance ballooned in the good times, but those days are over. Investors are becoming more selective when choosing corporate credits, and default rates are likely to rise – though perhaps slowly – as companies that have borrowed in hard currencies struggle to meet repayments from depreciating local currencies.
IMF support for carbon pricing raises the prospect of a global consensus on this theme at November’s Paris climate talks, but its implications for capital markets remain unclear.
The Andean nations of Colombia, Peru, Chile, Bolivia, Ecuador and Venezuela have many similarities, not least their economic dependence on commodities. Yet there are equally important differences, ensuring some will fare better than others if prices remain at low levels
Recent research coming from the IMF examining the negative impact of austerity and income and gender inequality has fed hopes in some quarters that the Fund is in the midst of a philosophical metamorphosis. But this has not yet translated into a change in the way the IMF and the World Bank operate in Africa.
Emerging market investors know a US rate hike is coming – but the uncertainty around when the Fed will act is hurting them. Yet perhaps there are bigger things in EM to fret about.