Pimco Tips Brazil Local Debt

Pimco, the global investment management firm with almost $830bn in assets under management, takes cover from the global markets storm in Brazil. “Concentrate investments in the economies with credible policy anchors and balance sheets strong enough to help them weather the storm,” EM portfolio manager Michael Gomez tells clients. “At the top of this list is Brazil, with local bonds a particularly attractive long-run investment. Five-year bond yields are close to 14% in Brazil, with inflation running close to 6%. The Central Bank has cemented its credibility by raising rates aggressively to ensure inflation returns to target. This provides investors a unique opportunity to receive high interest rates in investment grade credit, with credible monetary policy, prudent fiscal policy, solid balance of payments dynamics and political calm,” Gomez adds.