Pimco Shuns Korea to Turkey Covered Debt on LiquidityPimco Shuns Korea to Turkey Covered Debt on Liquidity – Bloomberg 07-08-13

Salient to Investors:

Investors say difficulty trading debt from fledgling markets is driving them away.

Timo Boehm at Pimco said new markets, such as South Korea or Turkey, don’t have sufficient liquidity.

Georg Grodzki at Legal & General Investment Mgmt said home loans used to support covered bonds vary across new markets, making it more difficult for would-be investors to analyze the notes. Grodzki said for markets to gain a sustainable foothold, you need a bullish tone in the market, and investors feeling good about the world and keen on extra yield, and the recent sell-off in the market and the EU agreement on bank resolution could reset the balance between senior unsecured and covered bond issuance.

Analysts expect South Korea and Australia to grow 2.5 percent in 2013, and the euro zone to record a second year of recession.

Ted Lord at Barclays said when you have a recession, people don’t necessarily go out and buy a house, so lending volumes are down because of that.

Read the full article at  http://www.bloomberg.com/news/2013-07-08/pimco-shuns-korea-to-turkey-covered-debt-on-liquidity.html

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