Global high yield will offer opportunities beyond the volatility

ON BONDS

Emerging market high yield corporates led the deluge in issuance that occurred from the summer of 2009. It was natural that, at some point, the market would react to this potential oversupply as happens with a lot of rapidly developing asset classes.

The third quarter of 2011 was the time emerging market investors pulled back their horns and tried to exit positions. This, coinciding with uncertainty over the European periphery, caused a big back-up in spreads and double-digit losses in September. In October, some of the spread widening reversed and the global high yield market and emerging markets especially enjoyed a bumper month. As we enter November, we have more Greek uncertainty. We now know how the Trojans felt the day after the wooden horse arrived. Though the European concerns will not abate, the higher growth rate in emer...