ENP Newswire -
Release date- 26052014 - Since late 2013, international bond markets have been offering an unusual and rare arbitrage opportunity between developed and emerging market (EM) corporate bonds.
Currently, as EM issuers, as rated by Standard & Poor's, display a more stable rating compared to their European and US peers, by switching from BB rated eurozone bonds to BBB rated EM bonds, investors can not only reduce their credit risk significantly but also take advantage of a 98 bp spread (as of early May 2014).
Furthermore, EM corporate bonds have performed well in the year so far, shaking off various adversities including the on-going dispute between
EM corporate bonds enable investors to get exposure to the superior EM growth story with a similar credit risk to that of developed market corporate bonds, all the while providing efficient diversification within a developed bond portfolio. In addition, they offer higher yields and better compensation for risk than similar developed market corporate bonds in the current low interest-rate environment.
UBP currently offers different EM corporate bond strategies: a traditional global one, one focused on investment grade, and a short-duration and high-yield one. The latter two strategies apply a traditional bottom-up bond-picking approach with the aim of offering the highest yield for a given level of risk.
UBP's EM investment-grade corporate bond strategy has consistently outperformed its benchmark (JPMorgan CEMBI Diversified) since its launch on
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