Emerging market debt trading volume rises 9% in 2019

Emerging market debt trading volume rises 9% in 2019

Bonds Debt Capital Markets Fixed Income Funds Argentina Brazil China India Mexico Latin America

Emerging market debt trading volumes totaled $5.34 trillion in 2019, a 9% increase over the prior year, according to survey released on Monday.

The fourth quarter of last year, where $1.33 trillion in bonds changed hands was a 25% increase over the same period in 2018. However, compared to the immediate third quarter volumes fell 6% from $1.42 trillion, EMTA, the emerging markets debt trading and investment industry trade association said in a statement.

“The year was marked by an abrupt turn in US FOMC interest rate policy, with a series of US interest rate cuts following 2018’s hikes, with generally strong EM debt performance,” EMTA said.

“Analysts noted that the more recent outbreak of COVID-19 has led to dramatic reductions in both US rates and 2020 EM growth forecasts,” the association added.

MOST TRADED
Mexico’s local and Eurobond volume combined was the most of any domicile at $972 billion, an 18% increase over 2018. Mexican debt volumes made up 18% of overall volumes. The second most traded domicile was Brazil, with 15% of overall trading volume for the year. Brazilian local and Eurobond trading volumes totaled $781 billion, a 26% increase over 2018.

While Mexico and Brazil are perennially among the most widely traded instruments, Indian local and Eurobond debt surged by 41% in 2019 to $514 billion and putting it in third place. India was followed by China at $352 billion and Argentina at $251 billion.

Eurobond trading volumes gained 22% for the year, hitting $2.275 trillion. Out of that total, 57% of Eurobond activity involved sovereign issues at $1.288 trillion in volume. This represented slight decline in overall share of trading volumes versus 2018.

On the corporate side of the market, Eurobond trading volumes touched $921 billion last year, roughly 40% of all Eurobond market activity. Sovereign Eurobond activity accounted for 24% of the overall survey volume, while corporate trading was 17% of total turnover.

Argentina’s 2028 bond was the most frequently traded, at $16.7 billion in volume. Mexico’s 2029 was second in volume at $16.5 billion. Petrobras’ 2049 bond had $14.5 billion in turnover and also represented the most actively traded emerging market corporate debt instrument in 2019. Rounding out the top five were Argentina’s 2021 bond at $14.4 billion and Argentina’s USD Par bond with $14 billion in volume.

LOCAL MARKETS
Mexican debt instruments were the most widely traded in the local markets last year, with $697 billion changing hands. The turnover in the local markets made up 57% of all reported volumes, or $3.058 trillion. The local market volumes rose 2% over 2018. In the local markets, Brazilian debt instruments accounted for $522 billion, followed by India at $464 billion, South Africa with $174 billion and China at $167 billion.

The survey compiled data from 44 leading investment and commercial banks, asset management firms and hedge funds and includes trading volumes from over 90 emerging market countries.