Indian cultural and corporate ties remain close as growth there slowed to 6 percent in the last quarter and the benchmark interest rate was slashed 50 basis points on a settled inflation reading. The fiscal and current account gaps continue to deteriorate as the budget statement raised the specter of additional retroactive foreign investor taxation, spurring a sovereign ratings outlook shift to negative. Portfolio equity outflows have resurfaced in part because of difficulties in mutual fund joint ventures with Fidelity deciding after asset and distribution limits to exit altogether. A long-awaited new pension scheme will fix management fees and prohibit insurance company clients that are a logical fit elsewhere. T. Rowe Price has been embroiled in disputes over personnel and advertising since taking a stake in the former UTI monopoly. Stock exchange relations with overseas institutions will be tested by the promise of direct individual entry and an activist holder fight against the Coal India selloff that favored state bidders in an operation underscoring the patient’s tentative health.

The runaway EMBI climber continues to be Venezuela, where President Chavez was noticeably mute on May Day as he endured another round of cancer treatment amid rumors the Foreign Minister may be his designated successor going into October elections with the opposition candidate only behind 5 points in some opinion surveys. The minimum wage was hiked 30 percent as price controls cap inflation at 25 percent. Banks were instructed to buy special purpose agricultural bonds, and debt issuance beyond the current $20 billion ceiling was authorized to manage the fiscal deficit and exchange rate. The unified currency trading platform only registers $20 million in daily turnover on administrative difficulties and new development partners like South Korea which will finance $10 billion in infrastructure cite it as a bilateral obstacle as dealings seek to diversify from the dollar amid the looming span for a top departure.  

At the opposite end of regional arrangements, Ukraine has not met gas pricing and other conditions to unblock multilateral assistance as a Eurobond return was indefinitely postponed and Russia’s VTB bank may not renew a $2 billion loan after June. Foreign reserves are down to $30 billion or 3 months’ imports as the central bank tries to maintain the 8/dollar hyrvnia value on a doubled current account deficit as a portion of GDP. Local government paper yields are at 15 percent and euro-denominated alternatives have been introduced to sustain appetite. Overseas banks that control almost half the system have slashed operations, with a recent S&P report citing “extremely high” credit risk with loans/deposits in excess of 150 percent. Opposition party chief Tymoshenko and allies have been jailed on corruption charges as President Yanukovych tries to skirt international condemnation and default until October parliamentary elections likely prompt more eruptions.   

Human rights investigations into civil war actions however continue to block full tourism and aid resumption in a pattern also touching neighboring Bangladesh, where the exchange has struggled to assert frontier momentum. Opposition figures and trade unionists have disappeared and been targeted by the Hasina Administration which returned to caretaker power under army guidance before scheduled elections in 2014. It managed 5 percent economic growth this fiscal year and just negotiated a $1 billion Fund credit line to cover spiking oil import costs. At the end of 2011 a suspected military coup led by Islamist proponents was thwarted on mixed evidence beyond consideration in principle.

Their stance may be tamer than Brazilian President Dilma Rousseff’s during her April visit to the US, where she lambasted the “monetary tsunami” triggered by the Fed’s near-zero interest policy and insisted the WTO investigate possible exchange rate manipulation. She also pressed for answers on a defense contract won by aircraft maker Embraer that was later suspended and solicited support for a permanent UN Security Council seat. With the benchmark Selic due to revert to its post-crisis low under 9 percent the central bank is now demanding that domestic lenders reduce record spreads after erecting a complex of anti-appreciation measures against foreign investors. The development giant BNDES will receive a fresh infusion for infrastructure and strategic sectors that find strict definitions discounted in a sudden shopping frenzy.  

To challenge the latest ratings direction European officials have called for launch of a new agency under their auspices while Germany’s Bertelsmann Foundation has designed a blue-print for a non-profit alternative that would be operated in all regions drawing on an initial $400 million endowment. It would apply traditional creditworthiness alongside a series of proprietary governance and transformation indicators that could better define sovereign grading as a public good after another burst of bad private determination.

The talks proceeded in the wake of a harsh IMF review on Jamaica as its new government tries to resurrect the standby accord which narrowly skirted debt default. GDP growth is minimal even with better visitor numbers, while inflation is over 5 percent, the fiscal deficit is 6 percent of GDP and the current account gap is twice that proportion. Remittances are up from North America and Europe but reserves dipped below $2 billion with multilateral lender repayment and oil import costs. Banks that endorsed a domestic maturity extension as part of the original structure have hinted at renegotiation as balance sheets are squeezed, and external bonds have been avoided on the prospect they too could be restructured. That outcome will definitely be repeated in Belize after the results of March elections where Premier Barrow got another term on a platform to reduce the stepped-up coupon load of the so-called “superbond.” Prices rallied on his desire for an “amicable” process as tourism which accounts for one-third of output and jobs was steady. The economy should expand 3 percent and the budget deficit is modest given the expected higher interest bill under a revised formula. In the Dominican Republic hospitality inflows increased 5 percent as the incumbent party may hang on to the presidency despite IMF program non-compliance and the chronic power crisis. As an active EMBI component, holders favor it over Costa Rica where the Chinchilla team planned a market return but was repelled on prerequisite tax reform as sharks circled.

The country has exited its IMF program, unlike in Georgia further afield where a new $400 million precautionary arrangement was just inked. Elections are approaching with strong opposition to the US-educated president and his party, as the government tries to emphasize public-private partnership potential in resort building and other areas which brought a visit from New York real estate mogul Donald Trump. Unemployment is over 15 percent, and the current account gap is 12 percent of GDP, which investors may not have foremost on their mind considering novelty value in an exotic EMBI sub-index.

In Zambia, which was also seen as a near-term maiden issuer, the ratings outlook went to negative as the new administration pledged to renegotiate copper mining projects and withdrew opposition party certification. Both gestures may moderate over time, as the president’s team seeks to reinforce democratic credentials in continental and global circles and maintain mainland China partner interest as industrial conditions at home deteriorate under the latest PMI readings and forecasts. A $500 million-range Eurobond is still in the works as the budget deficit has doubled from 2011 and electricity shortages plague both agriculture and metals production which previously sparked direct and portfolio investor excitement.

In traditional emerging Europe, Hungary was placed at the top of the IMF’s list for bank and sovereign spillover as corridor negotiations over a new facility unfolded over its spring gathering. The EU has reopened the way for assistance after clarification of central bank law changes and submission of a revised fiscal adjustment blueprint which envisions near zero economic growth this year. The benchmark interest rate was kept at 7 percent despite the forint again touching 300 and medium term bond yields almost 9 percent, as negative retail sales choked consumption. To meet the 3 percent of GDP convergence target a new financial transaction tax will succeed the special one applied by Prime Minister Orban whose opinion polls now single out reckless decisions.