The seven challenges facing EMD investors

What risk factors should investors look out for?

In a late-cycle environment, where the ongoing search for yield has compressed credit spreads across a range of sectors, the nuances in emerging market corporate bonds continue to present compelling opportunities.

However, the characteristics of many EM companies, not necessarily pertaining to their credit quality, often make the fundamental analysis process different and more challenging than the evaluation of developed market corporates.  While the spread and deleveraging metrics support a relative-value case for emerging market corporates, the myriad idiosyncrasies across the asset class also create inefficiencies that managers with local knowledge and extensive experience analysing EM corporates can exploit. The following points highlight these idiosyncrasies and demonstrate how to navigate...