For emerging market debt bankers and borrowers, 2012 started well and just got better. In every sector and almost every country yields plummeted and issuance records were smashed as investors dived into dedicated funds in unprecedented numbers in an increasingly desperate hunt for returns.
By the end of October, data provider EPFR Global put cumulative inflows into foreign-currency emerging market mutual funds at more than $48 billion, and total flows into developing-world funds were widely tipped to hit a record $85 billion by the year-end.
The primary beneficiaries of this current of liquidity in the first half of the year were credits in Latin America and Asia as investors remained mildly wary of the potential impact of further turmoil in western Europe on neighbouring economies to the east.
However, such concerns were largely assuaged by European Central Bank president Mario Draghi’s announcement on September 6 that the bank would embark on outright monetary...
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