Emerging Markets

The Future Of Emerging Market Debt - Expert View

Ainhoa Barcelona Reporter London 2 May 2013

The Future Of Emerging Market Debt - Expert View

Jonathan Mann, head of emerging market debt at F&C, shares his views on emerging market debt. Compared to developed markets, emerging economies are proving more robust and investor opportunity is increasing in this sector, Mann argues.

Emerging market growth versus developed market

Since 2007 and the ensuing collapse of Lehman Brothers, the credit crunch, global economic downturn and the eurozone sovereign debt crisis, various developed markets saw and are still seeing downgrades in their credit ratings, while the opposite is happening for some emerging economies, Mann says.

Over this period the demand from emerging market debt investors has been such that the number of countries issuing offshore sovereign bonds denominated in US dollars increased from 36 to 57. New issuers included Angola, Bolivia, Costa Rica, Mongolia, Morocco, Namibia, Sri Lanka and Vietnam, and further issuers expected to come to the market in 2013 may include Kenya, Bangladesh and Thailand.

The total outstanding stock of the countries comprising the JP Morgan EMBI Global Index in terms of eligible sovereign and quasi-sovereign debt is increasing, and is up 23.6 per cent since 2008 to reach $458.6 billion last year.

One of the main attractions for investors is also that the opportunity for diversification is growing rapidly. For issuers the key factor is they are usually able to borrow at lower yields and for longer maturities in international markets than in their domestic markets.

Register for WealthBriefing today

Gain access to regular and exclusive research on the global wealth management sector along with the opportunity to attend industry events such as exclusive invites to Breakfast Briefings and Summits in the major wealth management centres and industry leading awards programmes