Merrill Raises Mexico, Cuts Turkey

Merrill Lynch is using proceeds from a reduced allocation to Turkey to upgrade Mexico to market weight from a longstanding underweight. It is expressing the view by buying UMS 2017s and says it is a buyer despite the fact that month-to-date Mexico has outperformed. “Even then, as US credit concerns now impact EM debt spreads more clearly, we are comfortable allocating more exposure to low-yielding Mexican debt,” says Merrill. “While the curve has steepened recently, we feel more comfortable at the intermediate end, given the unsettled market backdrop, thus favoring the UMS ’17s,” the shop adds.