COVER STORY LOCAL CURRENCY DEBT: Pick and choose
Currency volatility means foreign investors are shying away from local government bond markets — exaggerating differences between countries. By Eduardo García
A tougher international credit market is likely to mean one
main thing in 2014 for sovereign borrowers in Latin America:
they will issue less external debt than last year - 28% less,
according to ratings agency Fitch. Hard currency issuance will
drop to $17.3 billion this year, the agency says, while
governments are likely to rely more heavily on their local
markets for their funding needs. For public debt managers in
Latin America, this means adapting to a new world in which they
will struggle to raise external debt on terms as favorable as
in the past. "With [the winding down of] QE we'll probably have
higher interest rates and higher financing rates than the ones
we have enjoyed in the past few years," says Michel Janna,
Colombia's director of public credit. "But it's the new
equilibrium; it's the new reality and we have to be ready for
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