There are risks that will be associated with the Kardashian bonds and none really have anything to do with the fact that “Keeping Up With The Kardashians” is not exactly solid financial markets coverage. Rather, Armenia has a BB-, or junk credit rating from Fitch Ratings. Moody’s Investors Services rates Armenian sovereign debt Ba2 with a negative outlook, according to Trading Economics.
Additionally, Armenia is not an emerging market. It is classified as a frontier market, which implies a higher degree of risk and could limit the potential ETF destinations for the Kardashian bonds if the bonds find their way into any ETFs at all. [Middle East Exposure Supports Frontier ETFs]
That said, EMB does feature some slight exposure to frontier markets such as Argentina, Ukraine and Vietnam. The ETF also has some exposure to other Eastern European nations like Hungary, Romania and Serbia. Hungary, Croatia, Lithuania, Lativia and Romania combine for about 24% of PCY’s weight, but the majority of the holdings in both ETFs are rated investment-grade.
The iShares Emerging Markets High Yield Bond ETF (NYSE: EMHY) could be a possible destination for the Kardashian bonds because that ETF offers exposure junk-rated, dollar-denominated debt, some which hails from frontier and Eastern European issuers. Again, at this juncture, it is just speculation about what ETFs, if any, could make room for the Kardashian bonds.
iShares Emerging Markets High Yield Bond ETF
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of EMB and EMHY.