Opinion: Market Turmoil Shores Up Unprecedented Investment Opportunities in Em Credit

Summary

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The complete loss of confidence in financial markets following the demise of Lehman Brothers has resulted in the indiscriminate liquidation of assets across the globe. With banks calling in loans from investors, requesting greater collateral from their hedge fund clients, and themselves selling assets to hold larger cash reserves, everyone has come under pressure to create liquidity and meet liabilities.

Not surprisingly, this rush to deleverage and repatriate capital has resulted in a climate of distressed selling, forcing sellers to dispose of fundamentally strong assets at distressed prices in order to meet their financial commitments. Driven by panic rather than reason, the market is completely decoupling technicals and fundamentals and nowhere is this more pronounced than in the emerging market credit space, where bid-offer spreads have widened drastically.

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Opinion: Market Turmoil Shores Up Unprecedented Investment Opportunities in Em Credit

But amid such turmoil, the market has unwittingly served up a once in a lifetime opportunity.' In sharp contrast to Q1 2007, investors can now achieve double digit returns from good quality emerging market (EM) assets at very cheap prices.

Going long EM corporate credit

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