BlackRock bullish on emerging markets debt

Thu Apr 9, 2015 1:10pm EDT
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By Jessica Toonkel

(Reuters) - BlackRock sees opportunities to invest in emerging markets debt, despite the rising U.S. dollar and an expected increase in U.S. interest rates this year, executives said Thursday.

Given the amount of deleveraging in some emerging markets countries over the past several years, and the unpredictability of other markets, like the European credit market, investors should consider emerging markets debt, BlackRock's bond managers said at a breakfast roundtable Thursday morning in New York.

Traditionally when the Fed moves, the thinking is that investors have to get out of emerging markets, but that is no longer true, said Rick Rieder, chief investment officer of fundamental fixed income and co-head of Americas fixed-income at BlackRock.

"We think you can create opportunities in more stable parts of the world," Rieder said.

Specifically, BlackRock sees opportunities in India, Indonesia and Mexico, which it views as high-quality countries with strong balance sheets, said Amer Bisat, an emerging markets portfolio manager in BlackRock's fixed income group.

"We are happy to take on the interest rate risk in these local markets," he said.

The firm also sees opportunities in the sovereign credit of countries like Mexico, Indonesia as well as Slovenia, Bisat said.

Meanwhile, the firm is short or underweight Venezuela, Ukraine, South Africa and Turkey, which have deteriorating credit.   Continued...

The BlackRock logo is seen outside of its offices in New York January 18, 2012. 
REUTERS/Shannon Stapleton