The Least Explicable Bubble

Of all the mini-bubbles now inflating out there, maybe the least explicable is the race among emerging market companies to borrow dollars. This has gotten them – and their governments – in huge trouble so many times in the past (see the Mexican default of 1982 and the the Asian contagion of 1997) that you’d think dollar debt would be kind of a hot stove thing for Brazilians and Mexicans.
But no, they’re back at it:
Emerging-Market Companies Shrug Off Trump in U. S. Debt Binge (Bloomberg) – Emerging-market companies are showing up to the U. S. debt market at the fastest pace ever, and finding plenty of appetite for their bonds. Sales of dollar-denominated notes have climbed to about $160 billion this year, more than double offerings at this point in 2016 and the fastest annual start on record, according to data compiled by Bloomberg going back to 1999. Emerging-market assets tanked after Donald Trump’s surprise election in November, but they’ve quickly recovered, with bonds returning 4 percent this year and outperforming U. S. investment-grade and high-yield debt.

This post was published at DollarCollapse on MAY 3, 2017.