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Why Now may be the right time for Emerging Market Bonds 

May 16, 2014
Blackrock, Nasdaq

After several months of not hearing much about emerging market (EM) bonds (other than "Where's the exit?"), we have recently been fielding questions on whether there is value in this space. A key focus is the relative value of USD denominated EM debt relative to other fixed income sectors, which I discussed in a Blog post last quarter.

Let's review the basics. A lot of investors evaluate fixed income sectors by looking at the level of yield they might receive for a given level of risk. We continue to explore how investors consider interest rate risk and portfolio positioning in the current environment. In addition to interest rate risk, there is substantial emphasis on the yields available for different levels of credit risk, which is essentially the risk that an issuer will not make regular coupon payments or will not be able to pay back principal. Credit ratings provided by third party agencies like S&P and Moody's are often used as a way of gauging the credit risk of an issuer . It essentially measures a debtor's ability to service and pay back its obligations.

Read more: Nasdaq

 
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