“Everything has changed”: ProMeritum remakes EM debt portfolio in pandemic's wake

Emerging Markets

London fixed income specialist ProMeritum Investment Management has made positive returns in each of the five years since its foundation, by finding “idiosyncratic opportunities” that arise from political and corporate disruptions in developing countries’ debt markets.

When the coronavirus pandemic rocked the world economy in early March, supply chains and oil prices were thrown into disorder, and emerging economies looked to be teetering.

ProMeritum’s co-founder, former credit analyst Pavel Mamai, believes that now is not the time to retreat, as he discusses remaking an emerging markets debt portfolio in the height of pandemic.

“Markets usually become very risk averse because of the shock they’ve just been through, but it is important to get the balance back, and now is not the right time to be more risk-averse.”

ProMeritum lost no time in rebalancing its own portfolio. “We exited most of our investment themes during the crisis. By the end of March, we had 70 per cent unencumbered cash, and few legacy assets. In other words, the crisis has changed everything,” says Mamai.

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