Emerging market debt sales hit January record despite elusive flows

Emerging market debt sales hit January record despite elusive flows

LONDON - Sovereign debt sales from developing nations scaled an all-time record for January at $47 billion led by major and less risky emerging markets but a lack of investor flows into dedicated funds could curtail a nascent recovery for riskier issuers. The start of the year - generally a busy time for debt sales of all sorts - has seen Saudi Arabia, Mexico, Hungary, Romania and a raft of others deliver some big ticket bond issuance. At the same time, flows into dedicated emerging market debt funds remained in the doldrums. Year-to-date, investors pulled about $1.6 billion out of dedicated emerging market hard-currency funds, according to Morgan Stanley data. That follows outflows of around $80 billion in 2022 and around half of that again last year. "Usually at this stage you would have seen money starting to come in", said Paul Greer, portfolio manager of emerging markets debt and foreign exchange at Fidelity International. "I think there's still a bit of an allocation towards equity markets. That money will eventually come back into fixed income and emerging markets would benefit. It's just taking longer than I thought," Greer added. While the early days of the year were dominated by