Macquarie Goes for Safety Over Yield in Emerging-Market Bonds
- Investor prefers debt from Paraguay, Chile, Indonesia
- Some lower-rated countries remind of EM debt in mid 1990s
Buildings under construction in downtown Ciudad del Este, Paraguay.
Photographer: Santi Carneri/BloombergEmerging market debt investors should latch onto countries with good access to cash and financing sources even if it means giving up double-digit yields, according to portfolio managers at Macquarie Asset Management.
Paraguay, Dominican Republic, Chile, Ivory Coast and Indonesia are better prepared to navigate a potential slowdown in global growth, according to Alexander Kozhemiakin, head of EM debt at the Australian asset manager. On the other hand, countries like Ethiopia, which early this month missed a coupon payment, remind him of the emerging-market debt crises of the 1990s on the back of “poor institutional frameworks, large external imbalances and, very often, fixed-exchange rate regimes,” he said.