Emerging Market Bonds to Reach 9% Yield, says BlackRock

Investors are buying emerging market bonds in an attempt to escape from zero interest rates in Europe - and there is more income to come in the asset class, says BlackRock

Karen Kwok 10 June, 2016 | 9:04AM
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Yields in emerging market bonds have another 3% to go, adding on top of the current 6% yield that the asset class is offering, says BlackRock.

Speaking at a briefing on Thursday, Sergio Trigo Paz, Blackrock’s head of emerging market fixed income said value of emerging market bonds will reach a peak in June. This suggests that price of emerging market bonds will start falling afterwards and yields will start to rise. He says investors have the second half of the year to “grab income” in the asset class and he sees another 3% in yield to go, on top of the 6% yields currently offering in emerging market bonds. 

“Green Shoots” in Emerging Market Bonds

In terms of specific countries, Trigo Paz has an overweight allocation in Russia, Brazil and Indonesia. He holds a more negative view on Eastern Europe as he expects inflation in the region to rise and start eating away at returns.

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Karen Kwok

Karen Kwok  is a Reporter for Morningstar.co.uk