Global investors are bingeing on emerging-market debt. In the first six months, governments in emerging and frontier markets have borrowed record sums. International sovereign bond sales hit $69.5bn in the first six months of 2014, up 54% on last year. Some of this just reflects improving fundamentals in the developing world, which have allowed several countries to borrow on global markets for the first time.
However, “the quality of the issuance is deteriorating, and that is something to worry about”, says Bhanu Baweja of UBS. Historically low interest rates have pushed investors to hunt down yield where they [...]