In 2005, abundant global liquidity, as well as low bond yields and flat yield curves, encouraged investors to seek higher returns in emerging markets, compressing credit spreads and helping borrowers to increase new bond issuance and engage in liability management. Investors were also encouraged by improving credit quality in emerging markets, pouring record amounts of money in mutual funds specializing in emerging market nations, helping to raise the total private capital flowing to those countries to unprecedented highs. Against this backdrop, spreads reached record low levels (below pre-Asian crisis), and were less volatile than spreads for investment grade and high-yield corporate bonds. The favorable external environment also boosted new debt issuance and liability management operations. In Latin America, the strengthening of local currencies against the dollar and of domestic fundamentals stimulated issuance in local Latin American currencies, which, for the first time, were less volatile than the Euro and the Dollar. Moreover, there was record corporate issuance in emerging markets, and corporate issuance was higher than sovereign issuance in Latin America, another first. Countries took advantage of the favorable financing conditions to pre-fund their borrowing requirements. Many issuers accelerated their 2006 and in some cases 2007 borrowing programs in anticipation of higher global bond yields. Several Latin American countries completed buy-backs and exchanges of external debt, in an effort to improve their debt structure and to extend the maturity profile. Argentina and Dominican Republic completed their debt restructuring process. Finally, emerging markets countries, particularly in Latin America, continued to reap the benefits from the commodities boom, while rising oil prices continued to be a net positive on oil exporter countries.