Brazil: Macro Headwinds Buffet Corporate Bonds

Opportunities can be found, but the outlook is negative overall

Brazil: Macro Headwinds Buffet Corporate Bonds

As my Invesco Fixed Income colleague Sean Newman outlined in his blog, Brazil: Macro Headwinds are Strengthening, the country is suffering from economic, fiscal and monetary risks. The increasingly negative macro backdrop — as well as an ongoing scandal involving the country’s largest company, Petrobras —has weighed heavily on Brazilian corporate credit.

Year-to-date, Brazil is the worst-performing Latin American country within the JP Morgan Corporate Emerging Market Bond Index (CEMBI) with a total return of -1.35%.1 It was the third worst globally behind only the Ukraine and Nigeria. This performance stands in stark contrast to that of the CEMBI overall, which has returned 1.9% year-to-date.

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Mexico’s Energy Reforms Have Widespread Implications

Mexico’s Energy Reforms Have Widespread Implications

Of the many initiatives Enrique Peña Nieto’s administration is attempting to enact, energy reform is among the highest profile and potentially the most impactful.

For approximately a decade, oil production in Mexico has been on the decline due to under-investment and inefficiency. Despite that, revenues from the state-owned Petróleos Mexicanos (Pemex) constitute approximately 34% of the federal budget. If the country can successfully attract outside investment to help reverse this decline in oil production, in addition to exploiting its substantial shale resources and generally improving the efficiency of the industry, the implications are broadly positive.

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While Russian Corporate Valuations Remain Compelling, We Are Cautious on Ukraine

While Russian Corporate Valuations Remain Compelling, We Are Cautious on Ukraine

During Invesco Fixed Income’s Emerging Markets team’s recent trip to Russia and Ukraine, we met with the management teams of 20 companies, as well as with analysts and economists of local investment banks. Overall, we left the meetings believing that de-escalation of the situation in Eastern Ukraine will continue.

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Retail, Infrastructure Are Issues to Watch in Colombia and Peru

Retail, Infrastructure Are Issues to Watch in Colombia and Peru

The Invesco Emerging Markets team spent a week traveling through Colombia and Peru, meeting with company management teams, consultants and government officials. During our trip, two themes were prevalent that could have broad implications for local companies and global investors: the relative under-penetration of modern-format retailing throughout Colombia and Peru, and the severe need for infrastructure improvement.

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