Frontier Market Debt: The Risks Are Growing

In a world where investors are scrambling to get their hands on yield at any cost, it’s easier for frontier markets to head straight to capital markets rather than their traditional lenders the IMF and World Bank, which usually have tighter underwriting standards. The most surprising frontier market debt issue so far this year was a $500 million bond offering by Tajikistan in September. The country promised to pay investors just over 7%  for 10 years, with demand several times the amount of money secured. $500 million is nothing for the likes of the US, but for Tajikistan, this is a huge infusion of cash. The influx represents 7% of its gross domestic product and dwarfs the $74...