Corporate bonds that span the BBB to BB rated space are referred to as "crossover bonds." By focusing on this space, investors can maintain a higher quality rating while adding relatively higher yield for the level of credit risk.
The emerging market debt asset class has experienced strong returns in 2016 driven by substantial inflows stemming from an increased risk appetite fueled by low developed market yields. Given the rally has been driven more by a search for yield than an improving story in EM countries, the question becomes, how long can this rally continue?
- Overview of recent market rally and performance drivers
- Shifts in the macro environment for emerging market countries
- Areas within EMD that present opportunities as well as risks
- The critical importance of portfolio construction and how it is executed by our team
Emerging market countries can issue hard currency debt denominated in global currencies such as the US dollar, but many EM countries can also issue debt denominated in their local currency. To learn how to best evaluate a local EM currency, watch this informative video.
Join us for HSBC Global Asset Management's webinar on Emerging Markets Debt (EMD), hosted by Brian Dunnett, Senior Global Emerging Markets Debt Product Specialist, with Nishant Upadhyay, Head of Global Emerging Markets Debt and Binqi Liu, EMD Economist.
We have begun to observe a stabilization in economic fundamentals in a number of EM countries, global monetary policy support that has mitigated external threats, and finally, attractive relative valuations in EM vs. developed markets.
Enhanced money market fund regulation, in the form of an amendment to Rule 2a-7of the Investment Company Act of 1940, is due to come into effect in 2016. With less than a year to go until the more structural changes are implemented, it is time to consider the details of how these changes will impact institutional investors in prime money market funds.
We believe that money market fund investors should use the remaining time to understand the changes and how they will impact their cash investment strategies from October 2016 onwards
The press has highlighted that a significant amount of EM debt will need to be reimbursed within the next few years. With emerging market countries expected to refinance through increased issuance we may see opportunities in widening spreads among certain countries. With the increase in dispersion among these emerging market countries, there is a greater need for flexibility in investing in the EMD asset class. Further, with the structural headwinds facing EM countries, benchmark inefficiencies, and diminishing liquidity within in asset class, we believe active management is now critical for investing successfully in EMD.