Emerging debt restructuring finds favour

By Carolyn Cohn

LONDON (Reuters) - A global economic recovery and extensive support for emerging markets from multilateral lenders have driven up distressed debt prices, making the market more attractive for emerging sovereign borrowers to restructure debt.

The recovery has fed into a stronger performance across the board for emerging markets, while tight monetary conditions worldwide have once more pushed investors towards higher yield.

This is benefiting countries such as Argentina which are looking to restructure defaulted debt and issue new debt.

"The combination of market sentiment having improved and global interest rates being low are such that it is a very good time to restructure," said Richard Segal, analyst at Knight Libertas.

Distressed debt often refers to debt on which the borrower has already defaulted. It is traded on the expectation that a restructuring deal will be reached.

Argentina and Ivory Coast have signalled restructuring deals of defaulted debt this year, and the normally thinly traded debt has risen sharply in expectation of the deals.

Argentina's bonds are trading at around 38 cents on the dollar, compared with 8 cents a few months ago.

Ivory Coast debt is trading at around 50 cents, compared with 25 cents in May and 17 in February.