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EM vulnerability

The table below shows the amount of stress we find today in #emergingmarkets bonds. It’s sorted by vulnerability, or the probability of default. The CDS spread is the canary in the coal mine for many of them, announcing that defaults may be inminent. The missing data point from the list, is the percentage of local currency debt vs major currencies, particularly dolllar denominated. With current dollar strength, paying coupons or issuing debt it’s even more complicated. With the exception of Bahrain, all of them have debt to gdp ratios below 100%, and below most eurozone countries. If the #ecb wasn’t buying European bonds with its large balance sheet, most European countries would be in this list.

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Source: Bloomberg

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