Most investors are sanguine on EM credit

Standard Chartered notes... 

• Most investors we met are relatively sanguine about the prospects for emergingmarket (EM) fixed income. 
  
  
• Some questioned the deterioration in EM fundamentals, but most are constructive on valuations due to supportive technical factors. 
  
  
• While GCC investors are focused primarily on regional credits, they are being forced to look further afield for investment opportunities given the relative lack of issuance in the GCC, large bond  redemptions (as 5Y bonds issued in 2009-10 mature) and ampleliquidity. 
  
  
• Accordingly, involvement in broader EM is picking up. The preference is for issuers with close links to the government, such as financial institutions and quasisovereign corporates. However, recent issues surrounding EM quasi-sovereigns such as Petrobras have dented confidence slightly.