Goldman Sachs estimates concluded that sovereign debt issuance in emerging markets by 2021 could reach $ 140 billion, or the same level over the year, offsetting the increase in high-yield bond sales after the slowdown in the eligible investment category.
According to Reuters, the bank said that, in light of the increased need for financing as a result of the Covid-19 epidemic, countries classified in the investment category rushed to issue bonds, which raised sovereign debt sales in emerging markets to 145 billion dollars, at the highest level in history.
Countries at risk of default have struggled to enter the market, as evidenced by Turkey’s sovereign wealth fund and Naftogaz last month, and bond sales were delayed due to market fluctuations ahead of the US presidential election and high borrowing costs.
Goldman Sachs said its outlook for increased issuance of higher-yielding bonds next year partly reflects its outlook for better prospects as risk appetite improves to help countries that have raised their high-risk debt.
Analysts Theresa Alves and Sarah Jarrett said in the report that high-yield sovereign offerings in emerging markets will rise to about $ 60 billion from $ 45 billion by 2020, against a slowdown in investment-worthy offerings to about $ 80 billion from $ 100 billion.
The two analysts added that the Gulf region and Latin America would likely remain the largest bond issuers in the bond market next year, with sales of about $ 37 billion and $ 32 billion, respectively, followed by Asia.
The bank said that the increase in debt repayment in 2021 indicates that net supply is still relatively moderate, and that Saudi Arabia, Qatar, Egypt and Mexico are expected to be the highest in terms of net bids next year.
In contrast, dollar-denominated bonds are not expected to be sold from Hungary and Croatia, which have switched to financing themselves mainly from the euro or their local currencies, as well as countries that issue high-yield bonds, such as Sri Lanka and Oman, in part because of the high risk of default. .
In addition, yesterday’s data showed that three-quarters of euro-zone government bonds traded on e-commerce platform TradeWeb, which amounted to 8.9 trillion ($ 10.35 trillion), were negative at the end of October, a record high.
According to Reuters, Tradeweb said that the market value of sovereign bonds in the euro zone, whose returns were less than zero, rose at the end of last month to about 6.53 trillion euros, or 73.25 percent of the total market value.
The figure reaches 6 trillion euros at the end of September and represents a record high for data going back to 2016.
Tradeweb data also showed that the total value of euro-denominated bonds in investment reached 1.37 trillion euros at the end of October, or about 40 per cent of the market value of 3.5 trillion euros. This is the highest since August 2019, and up nearly 29 percent at the end of September.
In addition, US investment bank Goldman Sachs, yesterday, sharply cut its economic forecast for Europe in the fourth quarter of this year, after a jump in Covid cases of 19 grams for major countries to announce a partial closure in November.
The bank said it expects real GDP in the euro zone to contract by 2.3% in the fourth quarter, in a significant update to its previous forecast of 2.2% growth.
It lowered the UK’s GDP growth forecast to 2.4% from the previous growth forecast of 3.6%.
“We expect the new restrictions to last three months before being gradually lifted from February on,” Goldman Sachs economists wrote in a comment to clients.
Yesterday, Germany tightened restrictions aimed at limiting the outbreak of the new Corona virus in Europe, which angered residents across the continent, while the Covid-19 crisis in the United States intensified.
The pandemic has infected more than 46 million people worldwide and killed about 1.2 million people, while the massive eruption of Cubid 19 in Europe and the United States raises more concerns about the already deteriorating global economy.
In an effort to control the large number of victims in Germany, Chancellor Angela Merkel ordered a series of seizure measures from yesterday until the end of the month.
As for England, it is preparing new measures to isolate homes, such as Austria, France and Ireland. Many have expressed concern about the economic cost of the quarantine, which lasted four weeks and went into effect on Thursday, according to the French.
The tightening of lockdown rules also began yesterday in Belgium, which has the largest number of cases in the world of Covid 19, compared to its population. Portugal has also imposed a partial lockdown, which will take effect tomorrow.
In France, Prime Minister Jean Castex said he would ban shopping centers from selling “non-essential” products from today to protect small shop owners, who have been forced to close their store doors.
Spain, in turn, imposed a night curfew, while almost all of its regions imposed a regional border closure to prevent long-distance traffic.
Yesterday, the Italian government announced new restrictions, at a time when the Minister of Health called for a national lockdown.
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