Hard to believe riskier sovereigns such as Honduras are taper-proof

Once upon a time, a magic kingdom – OK, a budding narcostate with the world’s highest murder rate – wished for money. The great wizards of all the lands convened. They cooked up a spell for it to borrow $500m for 10 years – at just 7.5 per cent. These wizards were very pleased with themselves. But! Along came a terrible monster, the Great Taper, mere rumour of which broke their spell. The yield on the kingdom’s magic bond rose to double digits.

Surprisingly, there is a happy ending. Honduras (20 homicides a day) managed its second ever foreign currency bond this month. It paid 8.75 per cent, after that debut 7.5 per cent US dollar issue in March. The yield was higher, but not that much. It is almost as if the Federal Reserve had never dropped its first big hint, between the two Honduras issues, that it might soon taper its buying of US Treasuries and begin withdrawing global liquidity.