Investors force a Eurobond rethink
Last year was a difficult one for the capital markets. Western European and American investors realized - or remembered - that lending to fast-growing economies has dangerous drawbacks, especially where their political and economic systems are not based on sound foundations.
After Asia in 1997 it was the turn of Russia to be in turmoil last summer and investors started to look back to developed markets with greater interest, just as Europe was embarking on a new economic and political era with the introduction of the single European currency, the euro.
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The market wobbles of the autumn shook confidence in borrowers across the credit spectrum. Spreads on emerging-market bonds widened dramatically, for example. But the spreads of even the most highly rated credits such as triple-A rated agencies Fannie Mae and KfW widened in the aftermath of Russia's devaluation and domestic debt default as investors moved into cash and treasury bonds. As the charts on this page show, the secondary-market trading performance of different groups of highly rated Eurobonds provide an interesting take on the behaviour of investors during the crisis.