Morgan Stanley is believed to be considering a new UCITS III-compliant fund, to launch in the next few months, to take advantage of opportunities in emerging market
Morgan Stanley is believed to be considering a new UCITS III-compliant fund, to launch in the next few months, to take advantage of opportunities in emerging market corporate debt markets reported Citywire Global this week. It is expected that William Perry, an executive director in the US banking giant’s EM debt team, will manage the fund, targeting investments in local currency debt markets. The bank launched an EM Domestic Debt Fund in ’07, focusing on sovereign government bonds. In a recent paper, Perry wrote: “If the compensation-to-default risk is priced equally for all asset classes, then emerging market corporate spreads should be around the same level as US corporate spreads, after accounting for business cycle risk.” With macroeconomic stabilization over the last decade, most EM countries have enjoyed robust GDP growth “on an absolute basis and relative to more developed economies,” wrote Perry. He adds that the resultant economic transformation has accelerated public sector deleveraging. Exact details about the fund (timing, AUM) are not yet known.
