UNTIL JUNE, IT had been a great 18 months for central and eastern European Eurobonds. The global backdrop of falling interest rates drove unprecedented amounts of money into emerging-market debt, as developed-market investors hunted abroad for yield. Many of these investors, including significant ones from Asia, were first-time buyers of CEE debt and thus most interested in straightforward Eurobonds, rather than more complicated local currency plays.
This, combined with a general optimistic assessment of the speed of CEE convergence towards EU accession and the single currency, helped to drive down CEE sovereign and blue-chip corporate bond yields.
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