Babies Thrown Out With the Bathwater II: Emerging Markets Debt

November 05, 2015

Certain emerging markets countries have not been safe from being thrown out as “babies with the bathwater” during the past year’s global credit selloff trend.

This week’s Chart of the Week shows the spreads in basis points of the 10-year sovereign bonds from key Latin American, Asian, and EMEA (which stands for European, Middle Eastern and African) emerging countries.  The chart shows the widening of these spreads from December 2013 in the blue bars, through the energy dislocation of December 2014 and China’s devaluation of September 2015, to October 2015 in the red bars.  It is not surprising that Venezuela’s and Russia’s spreads are elevated as they are major oil exporters.

However, the countries that may at least in part have been subject to the “babies thrown out with the bathwater” effect have ranged from Latin America’s Mexico to Brazil, Asia’s Korea, and the EMEA region’s Bulgaria.  For example, Mexico’s spreads have widened from 112 basis points to 161 basis points from December 2013 to October 2015.  These emerging markets babies that have been thrown out with the bathwater represent possible value and interesting opportunities for emerging markets bond managers.

The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

Related Content

05.14.2024

The “Fix” Is In!

The strength of the U.S. economy over the last several quarters has surprised many investors, as consensus expectations from the…

05.09.2024

The Emergence of Argentinian Equities

Argentina has faced myriad economic headwinds in recent time, including hyperinflation, currency-related difficulties, and a series of defaults on its…

05.02.2024

Is Bitcoin Fairly Valued?

Despite mixed performance to start 2024, bitcoin finished the first quarter up roughly 68%. Buoyed by a broad weakening of…

04.26.2024

1Q 2024 Market Insights Video

This video is a recording of a live webinar held April 25 by Marquette’s research team analyzing the…

04.24.2024

Japan: This Year’s Vacation Recommendation

Foreign investment isn’t the only thing streaming into Japan. In 2023, the number of travelers to the country surpassed long-term…

04.16.2024

The Banks’ Real Estate Problem

First quarter earnings season is getting started, with the largest banks reporting first. In the wake of last year’s regional…

More articles

Subscribe to Research Email Alerts

Research Email Alert Subscription

Research alerts keep you updated on our latest research publications. Simply enter your contact information, choose the research alerts you would like to receive and click Subscribe. Alerts will be sent as research is published.

We respect your privacy. We will never share or sell your information.

Thank You

We appreciate your interest in Marquette Associates.

If you have questions or need further information, please contact us directly and we will respond to your inquiry within 24 hours.

Contact Us >