Investors are Flocking to the Local Currency Bonds of One-time Emerging Market Pariahs

Egyptian, Pakistani, Nigerian, Kenyan and other countries’ local currency debts have been some of the most unloved assets — short of outright defaulted debt — in emerging markets in recent years, as currency crises have ravaged their economies. But such bonds are now making a comeback, helped by as a series of interest rate rises and moves to liberalise currency markets, as these countries bid to repair their damaged economies. Egypt’s debt has also been a popular trade this year. Foreign investors have poured $15bn into its local bonds, much of it following a $35bn investment by Abu Dhabi’s sovereign wealth fund in an attempt to ease the country’s financial crisis. FT