Barbados Leads Bond Rout as Dollar Peg Means Pricier Sunbathing
- Bond drop since U.S. election was deepest in emerging markets
- Tourist destination pegs currency to U.S. dollar at 2:1
This article is for subscribers only.
Barbados dollar bonds are the biggest losers in the recent emerging market rout as investors question the Caribbean island’s ability to compete for tourist dollars while it continues to peg its currency to the soaring greenback.
The yield on the nation’s dollar bonds maturing in 2022 has risen 146 basis points since the Nov. 8 election of Donald Trump triggered a sell off in emerging market assets as traders bet his policies will lead to higher borrowing costs in the U.S. As the falling currencies of rival destinations such as Jamaica and Mexico have made them cheaper to visit, Barbados’ palm-fringed beaches have become relatively costly.