The Dominican Republic perfectly illustrates many of the financial and economic challenges facing Latin America. The country’s recent growth has been facilitated by access to cheap international capital that has financed its current-account deficit: its first international bond in 2009 has been followed by many subsequent deals, all of which lowered the country’s benchmark with every fresh issuance.

Until last year that is, when an October 2013 debt deal worth $500 million priced to yield 6.6%, up sharply from the 5.875% paid for $1 billion in notes with the same tenor six months previously. The years of endless liquidity and record pricing for the region’s sovereigns seem to be over.

The beginning of the withdrawal of the US Federal Reserve’s quantitative easing programme at the end of 2013 and the linked improved growth prospects of the US economy have led to more…