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EM credit resilient and ready: Muzinich & Co
EM credit resilient and ready: Muzinich & Co

Yahoo

time13-07-2025

  • Business
  • Yahoo

EM credit resilient and ready: Muzinich & Co

While EM credit is not immune to global shocks, current valuations suggests that the market is well-positioned to weather volatility Emerging market (EM) credit is showing strength and resilience amid global macroeconomic volatility, according to Warren Hyland, portfolio manager at Muzinich & Co. In the asset manager's latest EM Monthly published on Jul 9, Hyland notes that while the broader market has had to digest a change in expectations for US monetary policy, EM credit has held firm, buoyed by improving fundamentals, idiosyncratic drivers and supportive technicals. 'Despite the macro volatility, EM credit fundamentals have been resilient and supported by positive idiosyncratic developments in several countries,' writes Hyland. This comes as investors scale back expectations for rate cuts by the US Federal Reserve. Earlier this year, markets had priced in multiple cuts. But persistent inflation in the US has delayed the Fed's timeline, with consensus now expecting just one cut before the end of the year. EM assets, which typically benefit from lower US rates and dollar weakness, have nonetheless found support from domestic dynamics. According to Hyland, a combination of stronger-than-expected data in several regions and improving commodity prices has helped credit spreads stay stable. 'Inflation has continued to surprise to the downside across several EM countries, allowing central banks in the region to maintain or resume accommodative stances,' he adds. Latin America, in particular, has been a bright spot. Countries such as Brazil and Mexico have delivered stronger macro data in recent months, while local currencies have held up well. 'In LatAm, improving terms of trade and prudent fiscal management have supported both sovereign and corporate credit,' Hyland writes. Africa has also seen improving sentiment in select credits. Hyland notes that investor confidence has returned in places like Nigeria and Egypt following policy reforms, IMF support and an improved external balance. He cautions, however, that differentiation remains key. 'We remain selective in Africa, favouring countries where reform momentum is credible and backed by multilateral support.' Meanwhile, Asia remains mixed. India has continued to show strong growth and political continuity following recent elections, while Indonesia and the Philippines have also posted relatively robust data. But China remains the outlier. 'Chinese credit markets are being watched carefully — while valuations appear cheap, the macro backdrop remains uncertain,' says Hyland. He adds that while Beijing has stepped up stimulus efforts in recent months, concerns around the property sector, weak consumer confidence and sluggish private investment persist. Hyland also points to technical factors that have bolstered EM credit so far this year. These include strong fund inflows into dedicated EM strategies, limited net new issuance, and relatively low default rates. 'Technical factors, including strong EM fund inflows and constrained new issuance, have also underpinned market performance,' he says. According to data cited in the report, EM hard currency credit has outperformed several developed market segments year-to-date. Dollar-denominated high-yield bonds, in particular, have benefited from renewed investor appetite. Hyland sees this continuing, especially in regions offering attractive risk-adjusted returns. 'High-yield corporates in LatAm and parts of Africa remain attractive due to their improved credit metrics, reduced leverage and still-elevated carry,' he writes. Still, Hyland cautions that global macro risks remain. Chief among them is the trajectory of US inflation and policy rates, which could affect risk appetite across the board. Political risk is also rising, with upcoming elections in several EM countries and the US presidential race in November. Geopolitical tensions — particularly in the Middle East and Eastern Europe — are another factor to watch. Despite these risks, Hyland is constructive on the asset class. 'While global markets may remain choppy, we believe EM credit offers opportunities for selective investors focused on fundamentals.' He adds that active management and country-specific analysis remain essential. 'We favour a bottom-up approach, identifying credits with strong balance sheets, improving earnings and supportive policy backdrops.' Overall, Muzinich's base case remains one of cautious optimism. The firm sees EM credit as offering a compelling combination of yield, diversification and fundamental support, even as global uncertainties persist. 'EM credit is not immune to global shocks,' Hyland concludes. 'But current valuations, combined with strong underlying fundamentals and supportive technicals, suggest the market is well-positioned to weather volatility and deliver solid returns over the medium term.' See Also: Click here to stay updated with the Latest Business & Investment News in Singapore High-yielding bonds in EM may beat peers as treasuries decline In emerging markets, 'better luck next year' is a hard sell MSCI: Factoring in an EM edge in times of uncertainty Read more stories about where the money flows, and analysis of the biggest market stories from Singapore and around the World Get in-depth insights from our expert contributors, and dive into financial and economic trends Follow the market issue situation with our daily updates Or want more Lifestyle and Passion stories? Click hereError in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

Former Swiss National Bank Chair Named Adviser for Asset Manager Muzinich & Co
Former Swiss National Bank Chair Named Adviser for Asset Manager Muzinich & Co

Wall Street Journal

time25-06-2025

  • Business
  • Wall Street Journal

Former Swiss National Bank Chair Named Adviser for Asset Manager Muzinich & Co

Muzinich & Co. appointed former Swiss National Bank SNBN -0.30%decrease; red down pointing triangle chair Thomas Jordan as senior adviser, bringing in a monetary policymaker's perspective to inform its public and private credit strategies, the asset management company said Wednesday. Jordan left Switzerland's central bank last year after almost three decades in various positions, including a 12-year tenure as chairman of the SNB's governing board. His term was marked by dramatic currency moves, unorthodox monetary policy, as well as a crisis at Credit Suisse—one of the alpine nation's biggest banks—followed by its acquisition by peer UBS.

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