Standish Sees Opportunities in Emerging Markets Local Currency-Denominated Bonds
October 26 2009 - 8:40AM
PR Newswire (US)
BNY Mellon Investment Boutique Sees Potential for Equity-Like
Returns BOSTON, Oct. 26 /PRNewswire-FirstCall/ -- Local
currency-denominated emerging markets debt has more attractive
opportunities than dollar-denominated emerging markets debt,
according to a recent analysis by Standish Mellon Asset Management
Company LLC, the fixed income specialist for BNY Mellon Asset
Management. "Emerging markets local currency-denominated debt is a
large and liquid asset class that offers the potential to generate
equity-like returns without taking on direct equity risk," said
Alexander Kozhemiakin, director of emerging markets strategies for
Standish. "Prospective returns from local bonds are supported both
by their relatively high yields and by the potential for their
currencies to appreciate against the U.S. dollar. Most emerging
markets currencies are competitively valued and their long-term
appreciation potential is strong. This potential is now being
realized as the global economic activity is bottoming out." In
contrast, Kozhemiakin noted that spreads have narrowed
significantly this year for dollar-denominated emerging markets
debt, which has now graduated to a somewhat lower risk, lower
return status, reflecting the improvement of the average credit
quality in emerging markets countries issuing external debt to
border-line investment grade. The strength of emerging markets debt
classes, both local currency debt and dollar-denominated debt,
became particularly evident during the recent global financial
crisis, as both demonstrated resiliency. "This was due to the
improved creditworthiness of most emerging markets sovereign
issuers and the positive growth differentials between emerging
markets countries and the developed economies. These two factors
will provide support for emerging markets debt in the years ahead,"
Kozhemiakin said. Javier Murcio, senior emerging markets analyst at
Standish, said the size of the local currency-denominated debt
market has been growing rapidly since 2002, when it actually was
smaller than the market for dollar-denominated debt. "Over the last
seven years local bonds have grown to account for approximately
two-thirds of all emerging markets debt," he added. Standish in
2006 was one of the first to launch a pure local currency emerging
markets bond strategy, which now has nearly $2.5 billion in assets.
Kozhemiakin said, "Two billion of this amount reflects allocations
to the asset class from European, Asian and South American
institutional and retail investors. We are now seeing growing
interest in emerging markets local bonds in the U.S. as well."
Notes to Editors: Standish Mellon Asset Management Company LLC,
with $62 billion of assets under management, provides investment
management services across a broad spectrum of fixed income asset
classes. These include corporate credit (investment-grade and
high-yield), emerging markets debt (dollar-denominated and local
currency), core / core plus and opportunistic (U.S. and global)
strategies. The firm also includes assets managed by Standish
personnel acting as dual officers of The Dreyfus Corporation and
BNY Mellon. BNY Mellon Asset Management is the umbrella
organization for BNY Mellon's affiliated investment management
firms and global distribution companies. BNY Mellon is the
corporate brand of The Bank of New York Mellon Corporation. BNY
Mellon is a global financial services company focused on helping
clients manage and service their financial assets, operating in 34
countries and serving more than 100 markets. BNY Mellon is a
leading provider of financial services for institutions,
corporations and high-net-worth individuals, providing superior
asset management and wealth management, asset servicing, issuer
services, clearing services and treasury services through a
worldwide client-focused team. It has $22.1 trillion in assets
under custody and administration and $966 billion in assets under
management, services $11.9 trillion in outstanding debt and
processes global payments averaging $1.6 trillion per day.
Additional information is available at http://www.bnymellon.com/.
All information source BNY Mellon Asset Management as of September
30th, 2009 except where noted. The views represented in this
document are those of Standish Mellon Asset Management Company LLC
and do not necessarily represent the views of the BNY Mellon Asset
Management umbrella organization. This press release is qualified
for issuance in the US and is for information purposes only. It
does not constitute an offer or solicitation of securities or
investment services or an endorsement thereof in any jurisdiction
or in any circumstance in which such offer or solicitation is
unlawful or not authorized. This press release is issued by BNY
Mellon Asset Management to members of the financial press and media
and the information contained herein should not be construed as
investment advice. Past performance is not a guide to future
performance. A BNY Mellon Company(SM) DATASOURCE: BNY Mellon
CONTACT: Mike Dunn, +1-212-922-7859, , or Vee Montebello,
+44-20-7163-6246, , both of BNY Mellon Web Site:
http://www.bnymellon.com/
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