Emerging market bonds more stable than Treasurys

[xchrom]

http://blogs.marketwatch.com/thetell/2011/10/20/emerging-market-bonds-more-stable-than-treasurys/

Even as markets get pushed back and forth by uncertainties about Europe, high-quality emerging-market debt should outperform U.S. Treasury bonds – considered one of the safest assets in the world, analysts at Bank of America Merrill Lynch said.

“There was a fear that EM debt was just like every other risky volatile asset, but this is not the case for high quality EM sovereign bonds,” analyst Jane Brauer wrote in a note Thursday.

From late July until early October, yields on a basket of eight, high-quality, 10-year bonds have fallen marginally – 18 basis points, or 0.18 percentage points, compared to Treasurys, which dropped 104 basis points. The basket includes debt from Mexico, Brazil, Russia, Turkey and Indonesia, the Philippines and Colombia.

“EM high quality bonds are relatively immune to the volatile risk-on/off moves inherent in US rates,” she wrote. “At some point, with a much higher US Treasury yield, the shrinking spread pickup of EM will be so irrational that prices will adjust. But there is still room to pick up yield and reduce volatility now, which is the goal of any real money investor.”

[Javaman]

1. What would be an example of an EM Bond? nt

[xchrom]

2. bonds presented by say brazil or turkey.

http://www.investinginbonds.com/learnmore.asp?catid=46&id=2

What Are Bonds?

A bond is a debt security, similar to an I.O.U. When you purchase a bond, you are lending money to a government, municipality, corporation, federal agency or other entity known as an issuer.* In return for that money, the issuer provides you with a bond in which it promises to pay a specified rate of interest during the life of the bond and to repay the face value of the bond (the principal) when it matures, or comes due.

Among the types of bonds available for investment are: U.S. government securities, municipal bonds, corporate bonds, mortgage- and asset-backed securities, federal agency securities and foreign government bonds. The characteristics of several different types of U.S. bonds are described in the Bond Basics Glossary at the end of this section. Market practices described here apply to the U.S. bond market, and may differ from those in other countries.

[Javaman]

3. Thanks!

I might look into Brazil.

[xchrom]

they seem to be doing alright.

i'm no expert -- and i wouldn't pretend to advise -- but some of the BRICS countries seem -- at any rate -- to be doing smart stuff.

[Oilwellian]

4. Advice from BofA?

I'll pass.