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UPDATE 1-Emerging mkt debt trading up 21 pct from yr ago -EMTA trade group
December 19, 2016 / 6:06 PM / a year ago

UPDATE 1-Emerging mkt debt trading up 21 pct from yr ago -EMTA trade group

(Adds data, updates headline to include trade group responsible for survey)

By Dion Rabouin

NEW YORK, Dec 19 (Reuters) - Emerging market debt trading volumes rose 21 percent in the third quarter from the same period last year and increased 2 percent from the second quarter, according to a survey released on Monday, as investors continue to search globally for yield.

Debt trading volume hit $1.379 trillion in the third quarter, according to a report released today by EMTA, the emerging markets debt trading and investment industry trade association. Volume was $1.137 trillion in the third quarter of 2015 and $1.357 trillion in the second quarter of 2016.

The increase from last year can be attributed to “strong inflows (US$26 billion during the quarter), global factors (the aftermath of Brexit) and a number of idiosyncratic developments,” Hongtao Jiang, head of emerging market credit strategy at Deutsche Bank, said in a statement released by EMTA.

He said the largest contributors to the increase were India, South Africa, Turkey as a result of the attempted coup, and Argentina, which made a return to the bond market earlier this year.

The rise in the third quarter continued a trend of investors seeking out debt from emerging markets as more than $10 trillion of developed market debt traded at zero or negative yields during the year.

Emerging market debt trading volume rose 12 percent in the second quarter of 2016 versus the same period in 2015.

Turnover in local markets instruments rose to $878 billion in the third quarter, accounting for 64 percent of total reported volume. That was a 24 percent increase from a year ago when $706 billion changed hands, and a 4 percent rise over the second quarter of 2016.

Indian instruments were the most frequently traded overall, according to the EMTA, with $216 billion in turnover, a 242 percent increase from $63 billion a year ago and up 15 percent from the second quarter. Indian volumes represented 16 percent of overall volumes.

Other frequently traded instruments were securities from South Africa, with $112 billion traded overall, and China, with $109 billion traded, according to the survey.

Indian instruments were also the most frequently traded local market debt during the third quarter, or debt traded in the local currency. India was followed by Mexico, with $152 billion, South Africa at $99 billion, Brazil at $97 billion and Poland at $65 billion.

The figures are based on reports by 46 international banks, asset management firms and hedge funds and tracks debt instruments in more than 90 emerging market countries. (Editing by Jeffrey Benkoe)

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