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Financials

REFILE-Emerging market debt trading rises 12 pct year over year in Q2 - EMTA

(Corrects name of association in headline and 2nd paragraph)

NEW YORK, Sept 13 (Reuters) - Emerging market debt trading volume rose 12 percent in the second quarter 2016 compared to the same period last year, as investors looked for higher yields than normally found in developed markets.

According to EMTA, the emerging markets debt trading and investment industry trade association, emerging market debt traded grew to $1.356 trillion in the second quarter 2016 from to $1.211 trillion in the same quarter last year.

Volumes also rose 5.0 percent in second quarter from $1.299 trillion in the first quarter this year.

“Trading volumes were up in the second quarter, as all markets recovered from a very negative start of the year,” said Jane Brauer, director and EM sovereign strategist at Bank of America Merrill Lynch in a release.

“The emerging markets debt asset class is currently in a sweet spot with improving fundamentals, strong inflows, increasing issuance and strong year-to-date returns.”

With more than $10 trillion of developed market debt trading at zero or negative yields, investors have found emerging market debt attractive.

Mexican instruments were the most frequently traded instruments, according to the survey, with $216 billion in turnover, representing a 19 percent decrease from the $266 billion reported in the second quarter of 2015, and an 8.0 percent fall from first quarter volume of $234 billion.

Mexican volumes represented 16 percent of overall volumes.

Trading of Indian instruments, which rose 146 percent to $188 billion from the second quarter of 2015, showed the second most turnover, followed by Brazilian assets ($155 billion), South African ($110 billion) and Chinese ($98 billion).

Indian instruments were the most frequently traded local markets debt, EMTA reported, showing $180 billion in turnover. Trading of debt instruments from India was followed by those from Mexico, at $172 billion, South Africa ($99 billion), Brazil ($89 billion) and China ($50 billion).

The figures are based on reports by 45 international banks, asset management firms and hedge funds and tracks debt instruments in more than 90 emerging market countries. (Reporting by Dion Rabouin)

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