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(Bloomberg) — Government support doesn’t count for as much these days in the developing world.

Investors are demanding the biggest premium in three years to own bonds of state-backed oil producers and utilities as governments become less able to live up to implicit guarantees. Barclays Plc says the bonds should pay even higher yields to account for growing risks.

“These companies are deteriorating, and in cases where the sovereigns are also deteriorating there are questions around whether the government support will be there when needed,” Aziz Sunderji, a strategist at Barclays in New York, said Thursday. “The relationship is drastically mispriced and quasis need to widen substantially to get back to a fundamentally justifiable valuation versus the sovereign.” 

The gulf in perceived risks is widest at national champions of commodity-producing nations hit by a 24 percent decline in a Bloomberg index of raw materials in the past six months. Trading in bonds of Brazil’s national oil producer Petroleo Brasileiro SA and Eskom Holdings SOC Ltd., the operator of South Africa’s electrical grid, show dwindling confidence in government backing.

*T State-backed bond Spread to sovereign (bps) PETBRA 3 2019 980 YPFDAR 8.875 2018 761 ESKOM 5.75 2021 541 ECOPET 7.375 2043 433

*T
About 85 percent of emerging-market commodity companies are government-owned, according to Barclays.

“Trading the quasi-sovereign sector correctly will be one of the most important drivers of returns for emerging-market credit investors in 2016,” according to strategists led by Sunderji in a note to clients this week.

To contact the reporters on this story: Lyubov Pronina in London at lpronina@bloomberg.net; Cecile Gutscher in London at cgutscher@bloomberg.net To contact the editors responsible for this story: Daliah Merzaban at dmerzaban@bloomberg.net Stephen Kirkland