Regarding Brazilian debt, although credit agencies have lowered their outlooks, Standard & Poor’s told Reuters this week that it is unlikely that Brazil’s sovereign rating will move to junk status in the event of a downgrade. S&P currently rates Brazil BBB.
The Market Vectors Emerging Markets Local Currency Bond ETF (NYSEArca: EMLC) has an almost 10% weight to real-denominated debt, making Brazil the ETF’s second-largest country weight behind Poland. EMLC has a yield to worst of 6.17% and an effective duration of 4.46 years, according to Market Vectors data.
Perhaps it is still too early to get truly excited about Brazil ETFs, particularly with EWZ 11.4% below its 200-day moving average, but EMLC and the Emerging Markets Aggregate Bond ETF (NYSEArca: EMAG) are each up at least 2.5% this month. EMAG also features a nearly 10% weight to Brazilian debt, some of which is dollar denominated.
iShares MSCI Brazil Capped ETF
