Some Emerging Corporates Look Like Safer Bet than Sovereigns

Growing numbers of emerging-market companies are borrowing overseas at cheaper rates than their countries of origin, a sign that sovereign risk is becoming less of a drag for the stronger, export-focused names.

Corporates from Mexico, Turkey and other developing nations have borrowed in dollar bond markets this year at an average 5.828% yield, versus the 6% demanded of sovereigns for similar-maturity debt, according to Bloomberg’s analysis of new bond issues through Feb. 4. In the case of Ukrainian agri-business MHP SE, investors were willing to accept yields several percentage points below that of the sovereign.