EM corporate debt steps into the limelight

EMERGING MARKET DEBT

Nathan Chaudoin, investment director, emerging market debt at HSBC Global Asset Management, explains why investors should now look to corporate debt instead of sovereign bonds in emerging markets.

Emerging markets have demonstrated remarkable growth in recent years, and their economies have proven particularly resilient compared to developed world countries over the past decade. Indeed, emerging markets continue to drive global growth, growing at a pace four times that of developed economies, and accounting for close to 70% of global growth in 2012, according to J.P.Morgan.  While investors have traditionally captured growth in emerging economies through sovereign bonds, we expect investor sentiment to gradually turn to favour hard currency corporates over the next five years. ...