Oppenheimer's Gregory Fisher says international investors are more at ease about including emerging market debt in their portfolios, but prefer some sovereign bonds over others.
Additionally, investors across the globe are developing an appetite for Caribbean bonds, said Fisher, managing director of Institutional Emerging Markets Sales at Oppenheimer & Company.
"A few years ago, if you asked someone in Hong Kong, or some parts of Asia about Jamaica, Cayman, etc, they could not tell you ..., but now, those pension funds are owners of Caribbean bonds," Fisher said Monday at a forum hosted by Sterling Asset Management.
most attractive issuers
The likes of Aruba, The Bahamas, Bermuda and Trinidad are the most attractive issuers from the Caribbean, he said, while Panama and El Salvador are popular markets in Central America.
Barbados, at one time, was among the list of most attractive issuers, but its economy has faltered since the 2008 world financial crisis.
Jamaica, whose economy has been struggling for over three decades, is now a more attractive prospect, according to Fisher.
Both countries have sought bailouts from the International Monetary Fund.
"I feel safer holding Jamaica debt than Barbados at this time," Fisher said. "The austerity measures and they way it was implemented kept the country in line with the IMF programme and the noise created by Barbados is not going to affect Jamaica negatively. I think, actually, it is going to affect Jamaica positively. I think this is causing a lot of the larger funds to take another look and revisit the Jamaica debt," he said.
Fisher was referring to Barbados's withdrawal of its repurchase offer for up to US$250 million of its 7.25 per cent notes due 2021 and seven per cent notes due 2022. Barbados also reportedly postponed plans to raise US$500 million of debt on the international market last week.
"If they had followed through with it, I don't think they would have raised the amount that they wanted," said Fisher. "There is just not enough interest out there right now for Barbados debt," he said.
Rather, Fisher said Barbados should have executed a debt exchange, swapping out the old debt for new ones with new terms.
a matter of confidence
He said the preference for Jamaica debt is not a matter of credit rating, but one of confidence.
"Barbados' economy is almost 100 per cent dependent on tourism, but for Jamaica, their credit market is so diversified. Jamaica has lots of options: You have coffee, cocoa, bauxite, tourism, sugar, quite a lot of options, so people will feel more comfortable," he said.
Additionally, the appetite for Jamaica's debt is linked to the government's outreach to the international investment community.
"I think the Jamaican Government is more seasoned and they know how to deal with international investors. The Barbados Government has not mastered that as yet," Fisher said.
"The Barbados situation has brought the Jamaica bonds to the forefront. It is now for us (investors) to take a closer look at Jamaica and see Jamaica's progress. I think with Jamaica's recent upgrade, the Jamaica bonds should be trading higher once things settle down in the United States," Fisher said.