Why derivatives are key to local debt strategies

EM debt

HSBC Global Asset Management's emerging market debt specialists, Guillermo Osses and Srinivas Paruchuri, discuss the importance of derivatives in managing emerging market local debt strategies.

Since the 2008 crisis, the developed world has been marred by low interest rates and elevated market volatility driven by the transfer of debt from the private to the public sector. In the emerging world, strong growth expectations combined with sound fiscal and monetary policies, we believe, present potentially strong, opportunities for investors. As the emerging world evolves, it has shifted its focus from dollar debt issuance to domestic debt. The local currency bond market, which has grown to $7trn, presents the investor with an opportunity to participate in a higher-yielding univers...