The Credit Edge by Bloomberg Intelligence Gramercy Says Private Is Way to Go in Emerging Markets
Jan 30, 2025
Robert Koenigsberger, founder and chief investment officer of Gramercy Funds Management, shares insights on the exciting trajectory of private credit in emerging markets. He discusses significant opportunities arising from high rates and decreased bank lending, emphasizing that we're only beginning to explore this market. The conversation includes the nuances of credit risks, strategic partnerships, and the evolving landscape of real estate investments in regions like Mexico and Turkey, while addressing the challenges posed by volatile economies and geopolitical factors.
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EM Investor Disconnect
- Emerging markets have a disconnect between potential and realized returns due to investor mistakes.
- These mistakes include treating EM as homogenous, focusing on equities, and relying on flawed indices.
EM Private Credit
- Consider EM private credit for higher, uncorrelated returns, similar to developed market private credit strategies.
- This approach offers higher yields and collateralized transactions, mitigating EM risks.
Liquidity vs. Safety
- In emerging markets, perceived liquidity is often mistaken for safety.
- Prioritize credit risk and collateral over the illusion of liquidity, which often disappears during crises.