In the fourth quarter of 2003, net capital flows to emerging markets accelerated sharply to reach a 3-year high of US$187 billion, a 50% increase from the US$124 billion reached in 2002. This increase is the result of the combination of abundant global liquidity, strong economic growth, and the improving credit quality of borrowers in both mature and emerging markets. Emerging markets were favored by moderate volatility, low risk-free interest rates and rising commodity prices. In addition, a weak US dollar, solid cash flows and search for yield supported the rally to Latin American countries. In response, credit spreads in both Emerging and Latin American markets narrowed. Issuers in emerging markets and Latin America benefited from the decline in spreads, as well as from an unusual large amount of year-end transactions. According to Merrill Lynch, net emerging markets debt issuance, adjusted for bond buybacks, reached US$74.8 billion in 2003. By region, Latin America had the largest share of total net issuance of US$43.2 billion, which amounted to 84% of the total. Some analysts have argued that emerging debt markets near-term gains could slow down due to geopolitical uncertainties, and heavy investors' positioning, however, in 2004, global markets should also renew with more volatility, a growing pipeline of strategic inflows and relative supportive fundamentals. Although the markets may continue to search for direction, the emerging markets and particularly the Latin American countries could still perform strongly, mainly commodity producers such as Brazil (soybeans) and Ecuador (oil) that have seen the price of some of their commodities increase.