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. Last Updated: 07/27/2016

Emerging Markets' Bonds Fall

LONDON -- Prices of Latin American and other emerging market Eurobonds have sunk so dramatically in the past few weeks that traders are renaming them submerging markets, and chances of near-term recovery look slim.


Spiralling U.S. interest rates and volatile European bond markets have driven all but the most hardy of Eurobond issuers away from the fixed income markets.


High-yield bonds suffered even more from investor jitters, and were shaken by the killing last week of Mexican presidential candidate, Luis Donaldo Colosio.


Mexico is seen as a major emerging market, and a benchmark sovereign for other emerging market debt.


"There are a lot of people who are in quite a lot of pain -- traders have been long on Brady bonds for the past three years," said one emerging market source from a European bank.


Eurobond prices have continued to fall this week, with little good news to fuel an upturn.


Argentina's $1 billion 10-year global bond is at 89 89.875 against a 99.368 issue price.


Mexico's BNCE's $1 billion 10-year global bond was trading late yesterday at 85.875 86.875, from a 99.516 launch price.


Traders recite a litany of emerging market bonds which borrowers have postponed. These include global dollar bonds for the Republic of Turkey and National Bank of Hungary, a Euroyen issue for the Republic of Argentina and a dollar bond for the Industrial Development Bank of India.