You Know It's A Global Debt Bubble When...

With analysts noting that markets are "taking the Fed's tightening policy in their stride," demand for emerging-markets debt is so strong that Bloomberg reports one of Asia's poorest nations is mulling a debut dollar-bond sale... Papua New Guinea.

The southwest Pacific nation plans to raise $500 million in five-year bonds, central bank governor Loi Martin Bakani said Tuesday at the Credit Suisse Asian Investment Conference in Hong Kong. The country would join Mongolia among sub-investment grade issuers in 2017. Sales of high-yield bonds total almost $15 billion so far this year, according to data compiled by Bloomberg.

“There is strong appetite for frontier issues -- and markets have taken the Federal Reserve tightening policy in their stride,” Stuart Culverhouse, chief economist at Exotix Partners LLP in London, said by phone. Issuers in the single-B tier -- the second-highest in the junk rating scale -- have found yields “are not prohibitively high for their financing needs,” he said.

Papua New Guinea aims to woo buyers from Asia, Europe and the U.S. for its bond sale in the second half of the year. This isn’t the country’s first attempt, after it hired banks in 2013 for an issue of dollar-denominated securities that didn’t pan out, despite the same confidence from bankers...

Read the entire article