Brazilian assets and related exchange traded funds experienced a huge sell-off over the past couple of months. Now, some fund managers are taking a second look at the developing market as cheap valuations begin to look enticing.

Specifically, Brazil’s sovereign and corporate local bonds look attractive after policy makers raised the benchmark lending rate to 10.75% to head off inflation, reports Ney Hayashi for Bloomberg.

“Fixed-income assets look very attractive,” Carlos Takahashi, the head of BB DTVM, Brazil’s biggest fund manager, said in the article. “There are some issues in Brazil, but you shouldn’t make the mistake of thinking that things are worse than they really are.”

While there are no Brazil-specific bond ETFs, investors can still gain exposure to Brazilian debt through emerging market bond ETFs. For instance, the actively managed WisdomTree Emerging Markets Local Debt Fund (NYSEArca: ELD) and the passively managed Market Vectors Emerging Markets Local Currency Bond ETF (NYSEArca: EMLC) both allocate about 10% to Brazil. The two ETFs also track local currency denominated debt, so they are subject to currency risks.

Moreover, the recent equity declines have also provided opportunities, notably with exporters and financial institutions, which are poised to outperform the benchmark Ibovespa stock index, Takahashi added.

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