Criat’s Post

[𝐈𝐧𝐝𝐢𝐚𝐧 𝐆𝐨𝐯𝐭 𝐁𝐨𝐧𝐝𝐬 𝐰𝐢𝐥𝐥 𝐧𝐞𝐯𝐞𝐫 𝐥𝐨𝐬𝐞 𝐢𝐭𝐬 𝐬𝐡𝐞𝐞𝐧 𝐢𝐧 𝐭𝐡𝐞 𝐈𝐧𝐭𝐞𝐫𝐧𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐌𝐚𝐫𝐤𝐞𝐭 ] What Foreign Investors look at while investing into sovereign bond? 1) 𝐂𝐑𝐄𝐃𝐈𝐓 𝐑𝐀𝐓𝐈𝐍𝐆 & 2) 𝐘𝐈𝐄𝐋𝐃 There are lots of factors which are considered BUT credit rating captures those key macro-economic factors. 𝐈𝐧 𝐦𝐨𝐬𝐭 𝐨𝐟 𝐭𝐡𝐞 𝐜𝐚𝐬𝐞𝐬, 𝐂𝐨𝐮𝐧𝐭𝐫𝐢𝐞𝐬 𝐰𝐡𝐢𝐜𝐡 𝐚𝐫𝐞 𝐩𝐫𝐨𝐯𝐢𝐝𝐢𝐧𝐠 𝐡𝐢𝐠𝐡𝐞𝐫 𝐲𝐢𝐞𝐥𝐝𝐬 𝐭𝐡𝐚𝐧 𝐈𝐧𝐝𝐢𝐚 𝐚𝐫𝐞 𝐧𝐨𝐭 𝐜𝐨𝐦𝐩𝐚𝐫𝐚𝐛𝐥𝐞 𝐢𝐧 𝐭𝐞𝐫𝐦𝐬 𝐨𝐟 𝐜𝐫𝐞𝐝𝐢𝐭 𝐫𝐚𝐭𝐢𝐧𝐠. Let us talk about country within emerging economy which has better rating than 𝐈𝐧𝐝𝐢𝐚 China has been our closest competitor & have been enjoying better credit rating also by S&P(A+) and Moody's (A1) both. It would be interesting to know the latest credit rating of china basis the current weak economic scenario. Due to weak economic situation in China, demand for chinese bonds increased anticipating conservative monetary policy which we have been witnessing already. Now China 10Yr Bond yield is hovering around 1.7% , 280bps lower than US treasury bond yield. In my view, the real comparison could be made with Indonesia from both yield & credit rating point of view. 𝐘𝐢𝐞𝐥𝐝 : 10Yr Indonesian Bonds are yielding around 7.12% , 33bps higher 6.79% (IGB yield). 𝐂𝐫𝐞𝐝𝐢𝐭 𝐑𝐚𝐭𝐢𝐧𝐠 : BBB is the rating given by S&P Global in April'22 whereas India has latest rating provided by S&P Global as BBB- so from risk point of view, they both fall in the moderate risk category though Indonesia has one notch above rating. 𝐒𝐨 𝐨𝐧𝐞 𝐦𝐚𝐲 𝐭𝐡𝐢𝐧𝐤 𝐭𝐡𝐚𝐭 𝐈𝐧𝐝𝐨𝐧𝐞𝐬𝐢𝐚 𝐢𝐬 𝐚 𝐠𝐨𝐨𝐝 𝐜𝐡𝐨𝐢𝐜𝐞 𝐰𝐢𝐭𝐡 𝐛𝐞𝐭𝐭𝐞𝐫 𝐲𝐢𝐞𝐥𝐝 & 𝐬𝐢𝐦𝐢𝐥𝐚𝐫 𝐨𝐫 𝐞𝐯𝐞𝐧 𝐛𝐞𝐭𝐭𝐞𝐫 𝐜𝐫𝐞𝐝𝐢𝐭 𝐫𝐚𝐭𝐢𝐧𝐠. There is another crucial parameter which I missed to mention above is the "𝐜𝐮𝐫𝐫𝐞𝐧𝐜𝐲 𝐫𝐢𝐬𝐤". In last 1 Yr, Indonesian rupiah has depreciated by around ~5% whereas INR has depreciated by only ~2.25% so actual yield would be further reduced to that extent. i.e. 6.79% would be reduced to ~4.5% & 7.12% would be reduced to ~2% so this way, Invstment into Indian Govt Bonds have done well here ,on a net basis as against Indonesian Bonds with almost similar credit risk & higher yield. Going by the above explanation, I understand, India may see higher active allocation as well with a strong expectation of higher weightages in Global/EM bond indices in the future on account of its strong macro-economic conditions. 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐰𝐡𝐲 𝐰𝐞 𝐝𝐨 𝐧𝐨𝐭 𝐬𝐞𝐞 𝐚𝐧𝐲 𝐬𝐢𝐠𝐧𝐢𝐟𝐢𝐜𝐚𝐧𝐭 𝐨𝐫 𝐜𝐨𝐧𝐬𝐢𝐬𝐭𝐞𝐧𝐭 𝐬𝐞𝐥𝐥 𝐨𝐟f 𝐢𝐧 𝐨𝐮𝐫 𝐛𝐨𝐧𝐝 𝐦𝐚𝐫𝐤𝐞𝐭 𝐟𝐫𝐨𝐦 𝐅𝐏𝐈𝐬 & 𝐰𝐞 𝐜𝐨𝐧𝐭𝐢𝐧𝐮𝐞 𝐭𝐨 𝐡𝐚𝐯𝐞 𝐠𝐨𝐨𝐝 𝐚𝐥𝐥𝐨𝐜𝐚𝐭𝐢𝐨𝐧𝐬 𝐰𝐡𝐢𝐜𝐡 𝐜𝐮𝐫𝐫𝐞𝐧𝐭𝐥𝐲 𝐬𝐭𝐚𝐧𝐝 𝐚 𝐥𝐢𝐭𝐭𝐥𝐞 𝐚𝐛𝐨𝐯𝐞 ₹2,50,000𝐂𝐫.  moneycontrol.com Reserve Bank of India (RBI) V Anantha Nageswaran CNBC-TV18

November 2024 Outlook & Update The Emerging and Frontier credit space proved remarkably resilient in November with the AHGY and EMHY Asia regional and global ETF credit ETFs respectively +0.60% and +0.56%. The VWO Emerging and Frontier equity ETF meanwhile returned -4.67% as US post-election protectionist fears rocked the risky asset space.  Credit-intensive positioning did take a disproportionate hit as investors retreated from riskier corners the emerging and frontier space. A worst-case outcome at an Indonesian garment manufacturer flagged in last month’s update weighed on returns. Duration-heavy positioning took an added hit from the lengthening of the US Fed’s expected rate cut glide path. The stellar performance of Sri Lankan sovereign positions offset these impacts. The announcement of better-than-expected debt exchange terms and a quick Moodys upgrade to Caa1 triggered the move.   The lengthening of US rate cut expectations saw several execute duration-shortening trades in November. The short-dated sovereign-guaranteed inaugural issue by Mongolia’s capital city proved a popular choice. Moodys’ November upgrade also put seasoned issues out of the Central Asian country into vogue. We see improving sovereign creditworthiness underpinning emerging and frontier credit markets in 2025. November saw Moodys upgrade Cyprus in addition to Sri Lanka and Mongolia. S&P upgraded Turkey’s rating with Moodys guiding similar upside in 2025. Fitch meanwhile assigned Nepal a first-time rating while upgrading both Argentina and Egypt in November. www.feimhk.com #FrontierMarkets #EmergingMarkets #CreditMarkets #Indonesia #SriLanka #Cyprus #Mongolia #Turkey #Nepal #CreditRating #Moodys #StandardandPoors #Fitch

November 2024 Outlook & Update The Emerging and Frontier credit space proved remarkably resilient in November with the AHGY and EMHY Asia regional and global ETF credit ETFs respectively +0.60% and +0.56%. The VWO Emerging and Frontier equity ETF meanwhile returned -4.67% as US post-election protectionist fears rocked the risky asset space.  Credit-intensive positioning did take a disproportionate hit as investors retreated from riskier corners the emerging and frontier space. A worst-case outcome at an Indonesian garment manufacturer flagged in last month’s update weighed on returns. Duration-heavy positioning took an added hit from the lengthening of the US Fed’s expected rate cut glide path. The stellar performance of Sri Lankan sovereign positions offset these impacts. The announcement of better-than-expected debt exchange terms and a quick Moodys upgrade to Caa1 triggered the move. The lengthening of US rate cut expectations saw several execute duration-shortening trades in November. The short-dated sovereign-guaranteed inaugural issue by Mongolia’s capital city proved a popular choice. Moodys’ November upgrade also put seasoned issues out of the Central Asian country into vogue. We see improving sovereign creditworthiness underpinning emerging and frontier credit markets in 2025. November saw Moodys upgrade Cyprus in addition to Sri Lanka and Mongolia. S&P upgraded Turkey’s rating with Moodys guiding similar upside in 2025. Fitch meanwhile assigned Nepal a first-time rating while upgrading both Argentina and Egypt in November. www.feimhk.com #FrontierMarkets #EmergingMarkets #CreditMarkets #Indonesia #SriLanka #Cyprus #Mongolia #Turkey #Nepal #CreditRating #Moodys #StandardandPoors #Fitch

November 2024 Outlook & Update The Emerging and Frontier credit space proved remarkably resilient in November with the AHGY and EMHY Asia regional and global ETF credit ETFs respectively +0.60% and +0.56%. The VWO Emerging and Frontier equity ETF meanwhile returned -4.67% as US post-election protectionist fears rocked the risky asset space. Credit-intensive positioning did take a disproportionate hit as investors retreated from riskier corners the emerging and frontier space. A worst-case outcome at an Indonesian garment manufacturer flagged in last month’s update weighed on returns. Duration-heavy positioning took an added hit from the lengthening of the US Fed’s expected rate cut glide path. The stellar performance of Sri Lankan sovereign positions offset these impacts. The announcement of better-than-expected debt exchange terms and a quick Moodys upgrade to Caa1 triggered the move. The lengthening of US rate cut expectations saw several execute duration-shortening trades in November. The short-dated sovereign-guaranteed inaugural issue by Mongolia’s capital city proved a popular choice. Moodys’ November upgrade also put seasoned issues out of the Central Asian country into vogue. We see improving sovereign creditworthiness underpinning emerging and frontier credit markets in 2025. November saw Moodys upgrade Cyprus in addition to Sri Lanka and Mongolia. S&P upgraded Turkey’s rating with Moodys guiding similar upside in 2025. Fitch meanwhile assigned Nepal a first-time rating while upgrading both Argentina and Egypt in November. www.feimhk.com #FrontierMarkets #EmergingMarkets #CreditMarkets #Indonesia #SriLanka #Cyprus #Mongolia #Turkey #Nepal #CreditRating #Moodys #StandardandPoors #Fitch