Emerging Markets

Sri Lanka debt pain will go from China to Wall St

11 Jan 2022

The poster child for Beijing’s “debt-trap diplomacy” is asking for easier repayment terms amid a worsening financial crisis. Defaulting on U.S. dollar bonds may be a better option. That would help Colombo kick a credit addiction as worrying as its growing dependence on China.

Reliance channels its name in 40-year bond

6 Jan 2022

It sold the longest tenure paper by an Indian firm as part of a $4 bln deal, on the back of a big successful expansion into consumer businesses. Bagging cheap funding now looks smart. But as China’s tech upheaval shows, four decades is plenty to test India’s reliance on Reliance.

What our columnists got right and wrong in 2021

31 Dec 2021

We look back at a year as unpredictable as its predecessor. We foresaw an M&A surge, even if some of the deals we called for, like Tesla buying Daimler, failed to materialize. But we nailed a few biggies, like Grab’s moment in the limelight, inflation’s return and mRNA’s success.

Nubank becomes LatAm’s biggest, and riskiest, bank

9 Dec 2021

An IPO worth above $40 bln tops even Itaú Unibanco. At roughly 10 times tangible book value it’s a pricey bet that a Warren Buffett-backed Brazilian fintech can disrupt the region’s market before established players react, without missteps, and with immunity from economic perils.

Super-app Grab rides high into New York debut

1 Dec 2021

The Southeast Asian giant held firm in a difficult year. It’s on track to hit targets set from its record $31 bln SPAC merger, supporting a rich 13 times sales valuation multiple. Margins in its ride-hailing business show the promise of its food-delivery-to-fintech ambitions.

Telenor dials up another promising Asian deal

23 Nov 2021

Following its jumbo Malaysian merger, the Norwegian telecom operator plans to combine its Thai unit with a rival owned by conglomerate CP. There’s a 25% premium on offer to sell, but $2 bln of intended synergies from the first transaction suggest sticking around is a better call.

Paytm IPO misery leaves Indian tech looking West

18 Nov 2021

The Alibaba and SoftBank-backed fintech company plunged a bruising 24% on its debut, in contrast to huge first-day pops for Nykaa and Zomato. The market is mispricing tech IPOs. It revives the debate about listing in a New York market more accustomed to money-losing firms.

EU banks march east towards muddy investment case

15 Nov 2021

BBVA may take full control of its Turkish unit for 2.2 bln euros and KBC is spending 1 bln euros on a Bulgarian rival. There’s logic to the deals. But boosting emerging-market risk and geographic sprawl carries a valuation penalty. Investors would rather have the cash themselves.

Emerging economies face stages of inflation grief

16 Sep 2021

Central banks’ reactions to rising prices come in three steps, BNP Paribas reckons: denial, acceptance, and action. Brazil and Chile are further along, having hiked rates quickly as pressures mounted. Investors will prefer them to countries stuck in the first stage, like Turkey.

Thailand previews difficult life without tourists

6 May 2021

The country looks ill-prepared for its fresh wave of viral contagion. With a slow vaccine rollout, foreign visitors won’t return anytime soon. It needs to wean itself off this economic crutch, but political unrest deters overseas investment. That’s a trying combination.

Rosier IMF forecasts are riddled with inequalities

6 Apr 2021

The international lender upgraded its global growth forecasts for this year and next. But there is a gulf between haves and have-nots, across countries and within them. Some of the sound advice it is doling out to mitigate the problem may be hard for governments to implement.

Viewsroom: Turkish trouble and emerging markets

25 Mar 2021

President Tayyip Erdogan’s abrupt firing of a third central bank governor forced investors to contemplate whether this might precipitate a run on financial assets in other developing markets, including South Africa. Breakingviews columnists discuss the implications.

Capital Calls: Airline IPO, Turkey’s central bank

18 Mar 2021

Concise views on global finance in the Covid-19 era: U.S. regional air carrier Sun Country Airlines’ IPO pop is justified by positive cash flow; Turkey shows how emerging-market policymakers face trickier choices than their rich-world peers.

Tokopedia neatly channels Indonesia’s potential

5 Jan 2021

The online shopping site, valued at $7.5 bln, lags Singapore’s Sea in the country. But the smaller company stands out for its single focus on one of the world’s fastest rebounding and digitalising economies. No wonder everyone from Gojek to Peter Thiel sees it as a hot target.

Guest view: China’s role in emerging economy debt

24 Dec 2020

Developing nations, struggling to repay loans, are being slowly locked out of credit markets. Their plight is likely to worsen. But when it comes to resolving this looming crisis, China has been largely missing in action. It should be held to a higher standard.

Ecuador spat reveals sovereign-debt market cracks

30 Jul 2020

Investors are suing to halt the country’s $17.4 bln restructuring, claiming it’s hoodwinking bondholders. They have a point. Going to court is a long shot, but Ecuador’s tactics will hurt its market-friendly makeover. And it may prompt an overhaul of how countries borrow, too.

Investors emerge faster than emerging economies

21 Jul 2020

Fitch Ratings may soon label more countries in the world as junk than investment grade. And Covid-19 has added to the problems that many poorer countries already faced. Even so, falling U.S. bond yields are forcing money managers to raise their exposure to riskier markets.

Ecuador is willing pawn in Argentina debt standoff

20 Jul 2020

Quito will tweak voting rules in its $17.4 bln restructuring, helping creditors pressure the larger LatAm debtor to do likewise. It’s an easy change to make and would still help emerging-market borrowers avoid being held to ransom in the future. Buenos Aires should take the hint.

Mexico’s stingy populist is haunted by history

2 Jul 2020

The president, known as AMLO, is the rare left-winger queasy about budget deficits, even in the face of a pandemic. This may be because of his nostalgia for the country’s mid-century boom, which was undone by debt-fueled spending. He has learned the wrong lessons from the past.

Argentina drama comes down to politics and Pac-Man

22 Jun 2020

Talks between the serial defaulter and its largest creditor group have stalled. The remaining gap is not huge. But the government seems intent on scoring a political win and may deploy an unusual strategy to do it. Rising frustrations may make an agreement hard to reach.