The market environment remains favorable for emerging debt, in particular due to the reopening of economies and support measures implemented by central banks and governments, JP Morgan Asset is said to have Management.
This asset class has withstood the crisis better than some expected with a relatively low default rate, expected to be around 3% this year, said Pierre-Yves Bareau, director of emerging debt investments in the rates team, on Wednesday. , currencies and raw materials of the management company.
“We are still constructive on emerging debt due on the one hand to the recovery of the economies, with China leading the way, and on the other hand to the monetary and budgetary support measures which have been implemented”, he said during an online conference.
Central banks have already deployed an impressive arsenal and it is now up to fiscal policy to take over, he added.
In terms of strategy, defensive assets, particularly in debt classified as investment grade (“investment grade”) by rating agencies, remain to be favored, according to him.
“We also wish, with the reopening of economies, to expose ourselves a little more to the assets which benefit from them, primarily speculative debt of companies or State and emerging currencies”, he said.
The risks are nonetheless present, on emerging debt as on other asset classes, recalled Pierre-Yves Bareau.
“It is very important for us to carefully monitor credit risks and geopolitical risks in order to adjust our portfolio accordingly,” he said.
Emerging bonds also offer attractive valuations, which is no longer the case in other segments after the recent rebound in financial markets, he added.
“The industry is still a bit out of step,” he said.
“After the crisis, investments were first made in assets perceived as being the safest, in particular on the American market due to the support of the Federal Reserve .
“Emerging markets today offer an attractive premium over developed markets and we expect flows to accelerate and investors to give more consideration to emerging assets.”
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