Developing Nation Debt Costs Soar as Belarus Joins IMF Requests

Oct. 23 -- Emerging market borrowing costs rose to the highest in six years as Belarus joined governments seeking a bailout from the International Monetary Fund to help weather the credit crisis and slump in commodities.

The extra yield investors demand to own emerging-market nations' bonds instead of U.S. Treasuries rose 14 basis points to 8.16 percentage points, the highest spread since November 2002, according to JPMorgan Chase & Co.'s EMBI+ index. The MSCI Emerging Markets Index of shares fell 3.3 percent to 517.24, extending the worst monthly decline in at least two decades.

``There is now no safe haven globally other than a deeply indebted U.S. government,'' said Jim Reid, head of fundamental credit strategy at Deutsche Bank AG in London. ``The events of the last few days are categorical evidence of the globalization of the credit crunch and its subsequent problems.''

Ex-Soviet Belarus followed Iceland, Pakistan, Hungary and Ukraine in requesting emergency loans as the global financial crisis restricts its ability to borrow, the IMF said yesterday. Argentina's lawmakers are attempting to stop President Cristina Fernandez de Kirchner seizing pension funds from money managers, as the country risks defaulting for the second time this decade.

The cost to protect debt payments by 14 emerging-market governments from Argentina to Ukraine jumped 318 basis points overnight to 991 basis points, according to Deutsche Bank prices on the CDX Emerging Markets Index. The yield on Russia's 30- year, 7.5 percent dollar notes increased 34 basis points to 11.32 percent, an all-time high.

By Denis Maternovsky and Laura Cochrane