The Bond Market Prefers Dictators to Democracies
- El Salvador defaulted last week, while Venezuela paid bonds
- Political gridlock poses risk to market-friendly governments
Dictatorships Trump Democracies in EM Bond World
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Dictatorships are on a hot streak in the bond market.
In the past year, sovereign notes from emerging markets under autocratic rule have returned 15 percent on average, compared with just 8.6 percent for securities from developing countries considered democratic, according to data compiled by Bloomberg. They also have better returns over the past two years, though beyond that the advantage fades.