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Promeritum Investment
PAVEL MAMAI
CO-FOUNDER AND MANAGING PARTNER, PROMERITUM INVESTMENT MANAGEMENT
In terms of market outlook for 2022, we can only comment on emerging market credit markets. We believe EM investment grade will trade in line with core rates, while the spreads in EM high yield widened significantly in 2021 to provide better protection against a core rates sell-off. New issuance in high yield will be more limited versus last year, but it is difficult to see significant inflows into the asset class in the inflation/ Fed tightening environment. When and if core rates stabilise though, the outlook for EM credit will be much brighter.
With regards to our investment strategy and area of focus within credit, in terms of opportunity and risk, our view remains similar to last year: macro factors – inflation, core rates, Covid-19 – are the biggest risk factors for EM credit. We believe, however, that events and volatility within the asset class provide for good alpha-generation potential. In H1, we will focus on turn-around in Tunisia, restructuring in Zambia, and potential de-escalation in Ukraine/ Russia. We will also be paying significant attention to Turkey and CEE rates markets.
