March 27, 2019 / 3:56 PM / 6 months ago

Emerging market debt trading fell 7 percent in fourth quarter, dipped in 2018: EMTA

NEW YORK (Reuters) - Turnover in emerging market debt fell 7 percent in the fourth quarter of 2018 compared with the same period a year earlier, a report released on Wednesday showed, while volumes for the full year dipped 0.4 percent.

A Bank Indonesia employee counts damaged or worn rupiah bank notes exchanged for new ones at the bank's headquarters in Jakarta, Indonesia, December 16, 2015. REUTERS/Darren Whiteside/File Photo

Emerging market debt trading reached $1.067 trillion last quarter, down 6.97 percent from the $1.147 trillion reported in the fourth quarter of 2017, according to a report by EMTA, the trade association for the emerging markets debt trading and investment industry.

Trading fell 11.45 percent from the $1.205 trillion reported in the third quarter of last year.

For the full year, EM debt trading volumes fell 0.44 percent to $4.879 trillion from $4.901 trillion in 2017.

Emerging market debt last year “was pressured due to the rise in US Treasury rates, and from specific EM credit events which curtailed issuance, namely Russian sanctions in April, as well as difficulties in Argentina and Turkey in the second half of the year,” said Jeff Grills, senior emerging market debt portfolio manager at Gramercy Funds Management, in an EMTA press release.

“By the fourth quarter we saw a further drop in issuance, primarily by EM corporate issuers, as the uncertainty about the future FOMC rate path caused increased volatility across the globe.”

Local market instruments turned over $2.987 trillion last year, a 9 percent increase from $2.747 trillion in 2017.

Mexican debt instruments were the most traded last year overall with $826 billion, or 16.9 percent of all volume, EMTA said.

Brazil, at $621 billion, and India, at $365 billion, completed the top three among most traded last year.

The survey includes debt instruments from over 90 emerging market countries as reported by 45 banks, asset managers and hedge funds, EMTA said.

Reporting by Rodrigo Campos; Editing by Susan Thomas

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