World Economy

Russia, Brazil Best Emerging Bond Markets: HSBC

Russia, Brazil Best Emerging Bond Markets: HSBCRussia, Brazil Best Emerging Bond Markets: HSBC

Despite the low ratings bond agencies have given it, Russia is a prime country for investors, a senior specialist at HSBC’s investment banking department said.

Russia and Brazil are the most prospective countries for bondholders, Olga Yangol, a vice president and senior product specialist for emerging markets at HSBC, Sputnik reported.

“Russia has gone to a floating exchange rate and we welcome this because a floating exchange rate compensates the growth and decline of the country’s export goods prices,” Yangol said.

According to Yangol, Russia and Brazil have relatively high bond interest rates, which makes them attractive for investment. In addition, Russia’s floating exchange rate helped it overcome the decline in oil prices.

“Because of this, Russia is stronger now than before. Of course, the situation is different now, but from a market point of view and considering that others underestimate Russia’s rating, right now it makes sense to invest in this country,” she added.

In Brazil, the interest rate is similarly high, but despite its current political upheaval and rising inflation, there are few risks for investors, Yangol said.

Russia’s ruble is advancing beyond any expectations, providing investors with an opportunity to invest in the nation’s economy, particularly, into governmental bonds.

Russia’s national currency, the ruble, has made significant gains against the US dollar and is the best performing currency this year, after its dramatic collapse in late 2014.

Russia is an appealing investment opportunity, as Moscow’s debt-to-GDP ratio stoonds at 13.41 percent at the end of 2014. Just for comparison’s sake, mainland China’s debt to GDP is 282 percent, the US is at 101.53 percent, and the EU is 87.4 percent.

The ruble advanced 12 percent this year after a dramatic slump of nearly 46 percent last year. The two main factors for the ruble’s depreciation at that point –  oil prices fell by 50 percent and the international sanctions against select Russian enterprises and individuals, limiting Russia’s ability to borrow in hard currencies.