Emerging Markets Can Swim Naked for a While
China’s credit compared to the US means a favorable tide for many countries.
The water’s fine for EMs. Above: Tidal bore of the Qianting River in China.
Source: VCG/Getty
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It’s not always the amount of money that counts. Last week, China raised $4 billion in dollar-denominated bonds. In comparison to other issuers, or to China’s own capital markets, this is trivial. The point is that the three-year and five-year bonds were issued at the same yields as equivalent Treasuries. China didn’t need to pay investors a premium for the extra risk they were taking.