Emerging Market Bonds Have Recently Become Compelling to U.S. Investors
Zero correlation makes this an opportune time for some EM debt issuers to market in the U.S.
Emerging Market bonds denominated in local currencies have continued to rally, driven primarily by interest-rate cuts by more EM central banks and higher bond yields in developed markets signaling a potential soft landing for the global economy. China’s sliding export prices are another tailwind for EM bonds, according to a recent Bloomberg article.
But what strikes us most is the near-zero correlation between EM and U.S. yields that a Bloomberg study recently revealed. While current valuations of EM bonds are debatable, the lack of correlation is clearly compelling for fixed income portfolio managers.
Therefore, now is an opportune time for EM issuers to market themselves in the U.S. through non-deal roadshows and bank-sponsored conferences that feature credits. But it’s important to remember that first impressions are crucial. That means using an investor presentation that clearly and concisely communicates a compelling investment thesis. The same applies to a company’s IR website, which is where most investors will begin their research.
Ivan Peill, Managing Director & Debt IR Advisory Lead: ivan@inspirgroup.com
