Welcome to the latest edition of the Exotix Capital Developing Markets Guide. This is the sixth edition, the previous one having been published in February 2011, when the concept of investing in frontier economies was beginning to gain traction again after being derailed by the GFC. A lot has happened since then.
The evolution of the frontier/EM fixed income landscape over the past decade or so has been characterised by two features. First, significantly more hard currency (eurobond) issuance, albeit mainly from sovereigns (developing market corporate issuance has generally lagged). Second, continuing sovereign defaults. Looking at the recent history of these sovereign defaults, we highlight what we think are three interesting characteristics of the recent sovereign debt restructuring experience. These are: (1) proactive creditor committees; (2) bondholders have generally done well in recent restructurings; and (3) a decline in exit yields.