An emerging force in CDS
A growing number of emerging market investment managers are turning to the credit default swap market to take advantage of discrepancies in the maturity profile of emerging market debt. Julian Evans asks whether this trend is likely to catch on
Pimco’s head of emerging market debt, Mohammad El-Erian, recently revealed one way Pimco has stayed within the top 10 performing EM managers for the last three years: selling protection via credit default swaps. In his latest emerging markets letter, El-Erian says one of the most profitable trades for his fund has involved selling protection, via credit default swaps (CDS), on bonds that don’t exist.
His colleague, Curtis Mewbourne, vice-president of emerging market portfolio management
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