The new problem with Asian sovereign debt—scarcity
ELEVEN months ago Indonesia’s government paid almost 12% to raise long-term money on the international capital markets, while America was financing its own debt for less than 3%. By early January the rate on America’s debt had climbed a bit, but Indonesia’s financing costs had plunged to a shade under 6%.
This remarkable shift in financing costs is not unique to Indonesia. The Philippine government issued a dollar-based bond in January carrying an interest rate of 5.7%. A year earlier, its outstanding bonds carried an effective rate of 8.4%. Malaysia and South Korea are also rumoured to be in the market for debt, and in sharp contrast to some rich-world issues, the buyers are likely to be at least as eager as the sellers. …
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