Investors turn to illiquid securities in emerging markets.
And as many analysts point out, even with this plethora of deals demand far outstrips supply; global portfolio investors, hedge funds and dedicated accounts are all clamouring to get their hands on emerging market debt. A three-year rally and solid long-term prospects – credit quality remains strong – mean that investment inflows are still sizeable.
This demand/supply imbalance is pushing spreads ever tighter. Although this is causing some analysts to ponder how much further prices can rise, it is also beginning to have an impact on the nature of emerging markets investing.
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