Editorial
EMERGING MARKET DEBT
CONTENTS
P4 - 5: Emerging market debt Welcome to our coverage of the £23trn developing economy debt market.
The emerging markets are no place to take a general view. Seasoned investors will know that political instability in Venezuela will not put a question mark over China, India, Brazil or South Korea’s ability to repay their debts. Nothing will prove that there is little connection between many of the economies in the developing world than the Covid pandemic. Some countries will recover faster than others from impact of the virus and the challenge for investors is to spot the winners during a time of such uncertainty.
Indeed, as many countries across the world were put into lockdown, investors sold billions of pounds worth of emerging market bonds. The initial outlook from rating agencies did not help as sovereigns in the region have experienced more than 70 downgrades this year. But did they move too soon? Spreads have improved since the sell-off and in September rating agency S&P announced that it expects emerging markets, excluding China, to bounce straight back by growing 6.2% in 2021 after predicting a contraction of 6.4% this year. Investors have turned to emerging markets to gain exposure to the econ- omies that are driving more than half of the world’s growth and to escape the low rates and yields on offer in the developed world. Yet this is a riskier area of the fixed income universe. Default and liquidity are not the only risks, currency exposure also needs consideration as movements in exchange rates could wipe out any gains earned. So, this vast collection of markets needs experienced investors and fund managers to navigate through such diversity of issuer and risk. In this supplement we take a closer look at the emerging market debt universe and find out what strategies the experts are following.
P6: EM debt in figures A snapshot of the asset class.
P7: The participants An introduction to the members of our emerg- ing market debt panel.
P8 -15: The discussion With Covid biting hard, institutional investors discuss their emerging market debt strategies.
P16 -17: Emerging markets
corporate bonds: the active opportunity T. Rowe Price’s Samy Muaddi outlines the case for an active approach to investing in debt issued by companies in the emerging world.
P18 - 21: An emerging world of opportunity The Covid pandemic caused one rating agency to predict a wave of emerging market sovereign debt defaults this year, but were they too quick to hit the downgrade button?
Mark Dunne Editor
m.dunne@portfolio-institutional.co.uk
November 2020 portfolio institutional roundtable: Emerging market debt
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