- Money manager Edgardo Sternberg also favors Colombian notes
- Brazil and Mexico are less appealing markets in the region
Loomis Sayles is favoring bonds from Argentina and Colombia over notes from Mexico or Brazil, betting the smaller Latin American economies will post faster growth and higher returns.
Yields on Argentina’s $2.75 billion of 30-year bonds could drop 1.5 percentage point over the next two years as President Mauricio Macri implements his plan to rebuild the economy and restore investor confidence, according to Edgardo Sternberg, a money manager at Boston-based Loomis Sayles, which oversees $229 billion in bonds including $16.5 billion in emerging-market debt.
"By the end of this administration, it should be at the stage that it could become investment grade," he said in an interview.
Sternberg also said Colombia’s local-currency bonds are attractive, with the peso poised to rally with higher oil prices. While Brazil’s assets are among the world’s best performers this year as investors speculated a new government would shore up the country’s finances and restore growth, further gains are more likely to come on a long-term basis, according to the money manager. He said the real may weaken toward 4 per dollar by the end of the year.
He sees Mexico’s peso as fairly valued and says he has a neutral position on the country’s debt. Notes from hotel operator Grupo Posadas SAB are a good bet for investors seeking to take advantage of tourism from the U.S., he said.