Oil volatility drives EMD funds out of exporters

Countries such as Mexico and Colombia affected

Extreme oil price volatility in recent weeks has pushed hard-hit emerging markets bond funds to cut exposure to exporter sovereigns and lengthen portfolio duration amid concerns that even more countries fighting the economic impact could see credit rating downgrades.

WTI Crude futures dipped as far as $30 into negative territory for the first time in history in April, largely due to reduced demand for the May contract and limited purchaser storing space, which was then followed by heavy falls in Brent Crude futures. Since then prices have remained volatile, with oil futures continuing to trade well below historical levels at $17 and $24 a barrel for WTI Crude and Brent futures respectively at time of publication.  Oil traders are reportedly now extending the duration of their oil futures positions, with contracts up to July looking unfavourable, s...