Oil doesn’t just float on water. It’s pretty buoyant on debt, too.
My colleague Lisa Abramowicz wrote earlier this week about the flood of money into emerging market debt this year. Just as investors are now willing to take negative yields on trillions of dollars in developed-economy sovereign debt, the premium they demand for bonds from riskier parts of the globe has shrunk to almost nothing.
Risky? Moi?
The risk premium on dollar-denominated emerging market bonds has collapsed
Source: BofA Merrill Lynch, Bloomberg
Such exuberance is both the making and breaking of the oil market.
Oil producers in developing countries borrowed heavily when oil prices were …
Read the full article at: http://www.bloomberg.com/gadfly/articles/2016-08-10/emerging-market-debt-bomb-ticks-for-oil-prices