LATAM: Issuers and investors get a taste for local debt

Latin America’s local-currency markets are no longer a sideshow for esoteric investors. Today, many emerging market portfolio managers have exposure. But, as Felix Salmon reports, the growth of domestic supply and demand will drive these markets forward.

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YOU WANT HIGH returns with little to no risk? It’s easy. Just buy Brazilian reais. Overnight interest rates are north of 17% and the currency only ever seems to get stronger. If you’re a dollar investor, you’re making high nominal returns from Brazilian domestic rates; what’s more you are getting capital gains from currency appreciation. No wonder local markets in general and Brazil’s in particular are the new hot asset class.

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