To Stress Test Emerging-Market Bonds, Look at Foreign Holdings
- Higher holdings ratio ‘on the margin’ raises risk: Goldman
- Diversification means emerging debt may benefit in long term
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Local emerging-market bonds have had a rough month, roiled by concerns that rising U.S. interest rates mean investors will pull money out of riskier markets to park more cash in the developed world. Those with the highest foreign ownership could be most exposed.
Goldman Sachs Group Inc. analysts Mark Ozerov and Kamakshya Trivedi ran the numbers. The following markets were found to have high foreign holding ratios both relative to their peers across developing nations and to their own history.