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RenCap Says IMF SDRs Will Reduce Frontier Markets Default Risk

EMERGING MARKETS
  • MSCI emerging markets gets $197b, MSCI Frontier $22b and Africa $33b from expanded IMF SDRs, according to estimates by Renaissance Capital
  • It's a game-changer for frontier risk in the next year or two, Charles Robertson, chief economist at RenCap, says. "This is going to help reduce default risk – and the "who's next?" risk"
  • The $650b increase is not a big deal for EM except for Argentina and Turkey. It's a considerably bigger deal for many in Frontier and Africa
  • "This is very helpful for EM/Frontier debt funds – and indirectly investors in Frontier equities too (because default tends to lead to FX weakness, as shown by Zambia).
  • Combined with high metal prices – and still stable U.S. treasury yields – and a slightly weakening USD."
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
BulletEM BulletEmerging Market NewsHomepage
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
BulletEM BulletEmerging Market NewsHomepage

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