Ashmore Targets Corporate Debt

Ashmore Investment Management, the large UK-based EM investor, has launched a new fund for institutional investors focused on mostly debt instruments from corporate issuers. The Ashmore Emerging Market Corporate High Yield Fund (AEMCHY) will invest in conventional corporate bond issues, leveraging its existing network. “The asset class can offer investors a risk return profile distinct from other segments of emerging market fixed income,” says the fund. It adds that the deals it buys may be tailored to its own specifications and also originated by Ashmore. “Such transactions can offer higher yields than the conventional markets, better security, and with additional equity upside. Ashmore has been active in this space for some time, with over US$1bn invested in the strategy across a number of existing fund products and accounts,” says the fund. “Since the US/European credit crunch, spreads on the conventional EM corporate bond issues have risen by 300-400bp making that segment more attractive,” says Jerome Booth, head of research at Ashmore. “Companies which might have traditionally gone to banks for financing are coming to us instead a bit more. On top of double digit yields we can often add equity upside too, for instance in a company which requires pre-IPO finance.”