THE BOTTOM LINE
Well-chosen emerging market bonds on track for good returns
Demand for debt from developing world hits record volumes, but investors need to be picky
The first half of 2017 has been marked by gluttonous demand for emerging market bonds, with record year-to-date volumes traded, and still counting. Investors’ demand for emerging market debt has been spurred by a continued search for credit-yield enhancement in an environment of persistently low to negative global interest rates as the recovery from the global financial crisis plods on. Amid the flurry of investor activity, it’s important to remember that emerging market debt is not the monolithic asset class it was once thought to be. We lean on top-down economic analysis and a quantitative approach to identify pockets of value within this sovereign debt market. It’s important to bear in mind the distinction between a country’s local and foreign currency denominated debt and the risks associated with each. To understand this distinction we need to wind back to 1989. Emerging market debt became a truly tradable asset class with the introduction of Brady Bonds, named after then US tr...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.