HINTS OF RECOVERY IN EMRGING DEBT DATA-- EMTA

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Hints of recovery in emerging debt data-EMTA
Thu Jun 11, 2009 1:45pm EDT

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By Daniel Bases

NEW YORK, June 11 (Reuters) - Emerging market debt trading volumes fell sharply in the first quarter compared to last year as investors grew cautious amid the global recession, though there are hints of a rebound in place, a new survey shows.

EMTA, a trade association for emerging markets, said on Thursday that trading volumes fell 23 percent year-on-year in the first quarter of 2009 to $915 billion. Local currency debt accounted for 72 percent of the trading volume turnover.

However, trading volumes did pick up from the fourth quarter of last year, rising 11 percent, when emerging market fixed income levels reached their lowest quarterly amount in six years.

Local market trading volumes of $656 billion were more than twice the $253 million traded in Eurobonds. Both categories however were down year-on-year, 19 percent and 30 percent, respectively.

Compared to the fourth quarter of 2008, local debt trade rose by 18 percent while Eurobond trade was roughly even the fourth quarter. EMTA surveyed 46 firms.

"I would have expected that local markets would have seen less of a recovery than was experienced in hard currency markets," said David Spegel, global head of emerging market strategy at ING and an EMTA board member based in New York.

NOTE: the global head ofb a emerging market has strategy at the ING and an EMTA board membering in the new york city.

Spegel said the rebound for local markets illustrated a robust market and countered the observed increase in local currency redemptions versus the strong recovery for the U.S. dollar.

"Investors were happy with their dollar exposure," during this period Spegel said.

Corporate Eurobond trade of $76 billion fell 33 percent year-on-year in the first quarter but surged 35 percent versus the last quarter of 2008. Trading in this sector accounted for 8 percent of overall survey volume.

Sovereign Eurobond trading of $168 billion made up 18 percent of the total volume in the first quarter.

Brazil maintained its top rank as the country with the biggest volume share of debt traded at 19 percent, followed by Turkey with 15 percent and China with 10 percent in the first quarter.

© Thomson Reuters 2009 All rights reserved

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