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Default rates for HY corporates move sharply in EM’s favour
Weekly investor research
11 April 2016
Default rates are falling among Emerging Markets (EM) HY corporates, while they are rising among US HY corporates.
EM FX reserves are rising again, including China’s. Peru’s first-round Presidential election appears to have produced a better
than expected outcome with two pro-market candidates – Keiko Fujimori and Pedro Pablo Kuczynski – set to face off in a 5 June
second round election. In Brazil, the focus is firmly on a possible impeachment vote against President Dilma Rousseff in the
third week of April, while President Zuma’s victory in the National Assembly’s impeachment vote should not be regarded as a
sign of strength. Ukraine’s economy is looking better, but the recovery will only be sustainable if the political situation improves.
The global backdrop is worsening as markets are growing increasingly concerned about limited options available to policy
makers in the event of renewed weakness in developed economies.