In The News - Financial Times - Hedge funds seek out emerging markets

Hedge funds seek out emerging markets as Covid-19 continues to wreak havoc

Trading opportunities seen in debt restructurings and low valuations

By Laurence Fletcher

As the Covid-19 pandemic continues to strike countries around the world, hedge funds are preparing for a host of debt restructurings in emerging economies.

Zambia’s struggle with its international creditors over debt payments is the latest sign of the stress to come. Last week, a group of 14 hedge fund and traditional bond investors indicated they would not support a proposal by the debt-laden country to suspend debt interest payments, unless it provided more clarity over its debts and came to the negotiating table…

Even beaten-down Venezuela has its fans despite debt trading at just 8 cents of its face value. Lee Robinson, founder of Altana Wealth and former co-founder of Trafalgar Asset Managers, this summer launched a fund to invest in the debt, telling investors in a letter that “the upside is the best we’ve ever seen for a sovereign debt restructuring”.

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