Wednesday, July 14, 2010

Hughes: emerging marketdebtpace

Emerging markets have been subject to inflows of hot money in the past, hitting their economies hard when the money left as quickly as it arrived. However, investors believe the financial crisis and shift in risk perceptions mean that this time it is different.

“Debt-to-GDP ratios in the developed world are about double those in emerging markets, and they’re growing,” said Sam Finkelstein, head of emerging markets debt at Goldman Sachs Asset Management.

“This makes emerging markets interesting because you’re picking up incremental spread [higher interest rates compared with developed world rates], and in return you’re actually taking less macroeconomic risk.”

Goldman’s dedicated emerging markets debt assets grew from $3.3bn in March last year to $13.2bn in March 2010.

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