EM bond managers removing corporate debt - S&P

S&P's annual emerging markets debt review shows managers believe corporate bond default levels will rise this year and are shifting into high-quality government debt.

Fund managers claim the combination of widening spreads, low sovereign default risk and the unlikelihood of interest rates rising represent a buying opportunity for government bonds, and many are removing pure corporate plays from their portfolios. The research also shows managers are becoming more discerning about the origin of emerging market debt. “Most managers now split Latin America into good and bad countries and many are overweight European borrowers because they are significantly overweight Russia but underweight Central Europe,” S&P Fund Services lead analyst Kate Hollis say...