Thomas Haugaard, portfolio manager at Janus Henderson Investors, discusses misconceptions about emerging market debt governance compared to developed markets.
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“There are plenty of those where you've seen a significant transition to policy setups that are very similar to developed markets, and that is not something that reaches a lot of headlines, but it is something that has been happening in the past 20 years, I would argue.”
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Haugaard: Markets Overprice Improving Sovereigns by One to Two Rating Notches
“At the end of a positive rating story, we almost always found that the market is pricing one to two notches too much of a good story. So when credit risk is actually not going down anymore, there's a tendency for investors to stick with a good story for a litt…”
Thomas HaugaardDec 14, 2023▶ 22:24Thomas Haugaard - Hard Currency Emerging Markets Debt at JHI (EP.356)
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Thomas HaugaardDec 14, 2023▶ 27:20Thomas Haugaard - Hard Currency Emerging Markets Debt at JHI (EP.356)
Disclosure
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“We are not focused on that. We focus entirely on the EM side of the asset class. So we focus entirely on the risk premium, the spread that you get on top of US treasury yields. And we focus entirely on figuring out where that is going at the country level.”
Thomas HaugaardDec 14, 2023▶ 11:46Thomas Haugaard - Hard Currency Emerging Markets Debt at JHI (EP.356)
Insight
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“The dynamics of that relationship is market is forward looking one and a half, two years. And this is a stylized fact. There are plenty of deviations from that depending on specific economic development phases. But in general, the market is forward looking by …”
Thomas HaugaardDec 14, 2023▶ 21:45Thomas Haugaard - Hard Currency Emerging Markets Debt at JHI (EP.356)
Insight
Haugaard: Regulatory Quality Is the Second Best Predictor of Sovereign Ratings
“And the second most important variable to understand where ratings are going is regulatory quality. That captures the perceptions of the ability of the government to formulate and implement Policies and regulations.”
Thomas HaugaardDec 14, 2023▶ 25:50Thomas Haugaard - Hard Currency Emerging Markets Debt at JHI (EP.356)
Insight
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“You do see that time corrupts, and a lot of the feedback mechanisms that you have in democracies, they disappear. They don't exist in the long term, and I think that's the biggest challenge. It's not you want to Two-year sovereign credit risk assessment that w…”
Thomas HaugaardDec 14, 2023▶ 28:36Thomas Haugaard - Hard Currency Emerging Markets Debt at JHI (EP.356)
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