IIF
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IIF
@IIF
The global association of the financial industry
- Our Turkish Lira fair value has been unchanged at $/TRY 7.50 since the middle of last year, but latest Global Macro Views makes another adjustment to reflect the evolution of the balance of payments, lifting our fair value to $/TRY 9.50. 🔒: ow.ly/NBHU50EHixr
- NEW Global Debt Monitor: Global debt hit $246T in Q1 2019, nearly 320% of GDP. Debt by sector, Q1 2019 (as % of GDP): 🔹Households: 59.8% 🔹Non-financial corporates: 91.4% 🔹Gov't: 87.2% 🔹Financial corporates: 80.8%
00:00 - Some emerging markets still rely heavily on foreign funding for bank loans, especially South Africa, Turkey, and Russia.
- With record high levels of hard currency debt, #EmergingMarkets are now more sensitive to #USD appreciation.
- Many U.S. firms are not generating enough #earnings to cover interest expense—despite still-strong earnings growth. With growth expected to slow in 2019 and rates still rising, the problem could get worse.
- Portfolio inflows to #emergingmarkets slowed sharply in August, to $2.2 billion from $13.7 billion in July.
- Turkey’s CDS spread and bond spreads have risen nearly 350 basis points—the highest level seen since the peak of the Euro Area debt crisis. Higher refinancing costs will put further strain on government budgets and corporate borrowers (a risk for the Turkish banking sector).
- From our real-time flows tracker: Cumulative EM capital outflows since Jan. are already 2x as large as during the 2008 financial crisis and also dwarf other stress episodes like the taper tantrum and the 1997-98 Asian financial crisis. ow.ly/71l330qqui8
- Central bank liquidity set to begin evaporating next year—leveraged borrowers beware!
- ICYMI: Turkey’s CDS and bond spreads have risen nearly 350 basis points – the highest level seen since the peak of the Euro Area debt crisis. Higher refinancing costs will put further strain on government budgets and corporate borrowers (a risk for the Turkish banking sector).
- The global debt-to-GDP ratio surged by 35 percentage points to over 355% of GDP in 2020, well beyond the upswing seen during the 2008 global financial crisis. More in our new Global Debt Monitor: ow.ly/bcL050DCTA7
