Lazard Emerging Markets Debt

Transcription

Lazard
Emerging Markets Debt
11/14
Platform
Review
Performance Summary as of 30 November 2014
(All data in US dollars; %, unless otherwise noted)
Benchmark-Aware Strategies
Annualized
1 Year
2 Years
3 Years
Since Inception
(1 December 2010)
8.66
9.40
2.52
8.38
7.83
9.97
10.53
2.44
7.36
6.93
-50
-131
-113
+8
+102
+90
Emerging Markets Debt – Local Debt
-1.36
0.97
0.43
-2.48
2.45
2.70
JPMorgan GBI-EM Global Diversified Index
-1.31
0.22
-0.33
-3.46
1.62
1.93
-5
+75
+76
+98
+83
+77
1 Month
YTD
Emerging Markets Debt – Core
-0.41
JPMorgan EMBI Global Diversified Index
0.09
Excess Return (bps)
Excess Return (bps)
Since Inception
(1 October 2011)
Emerging Markets Debt – Blend
-0.76
3.90
4.11
-0.09
5.64
6.40
50% JPM EMBI Global Diversified/50% JPM GBI-EM
Global Diversified Index
-0.61
5.03
5.01
-0.51
4.52
5.17
-15
-113
-90
+42
+112
+123
Excess Return (bps)
Benchmark-Unaware Strategies
Emerging Markets Debt – Total Return
Since Inception
(1 December 2010)
-0.48
5.46
5.74
3.10
6.22
5.33
Since Inception
(1 November 2011)
Emerging Markets Debt – Corporate
-1.50
3.15
3.83
1.35
6.21
5.41
Performance is preliminary and presented gross of fees. The performance quoted represents past performance. Past performance is not a reliable indicator of future results.
Please refer to the Important Information section for a brief description of each composite.
Outlook
The single largest event that affected emerging markets returns
in November was the collapse in oil prices (9% declines for the
near-term Brent contract) leading up to the OPEC meeting at
month-end. Unfortunately (for emerging markets countries),
there was no announcement of an oil production cut by the
cartel, resulting in commodity prices continuing their free fall
in the last calendar days of the month. While emerging markets
analysts are sorting the bodies (Russia, Venezuela, Nigeria,
Ecuador, Angola, Ghana, Kazakhstan, Malaysia, Colombia,
Mexico) from the recent oil price crash, it is important to stay
ahead of the market in what is likely to be a historic stimulus
announcement at the 22 January 2015 European Central Bank
(ECB) meeting. Key to that meeting will be the magnitude
of stimulus announced, the form it will take, and the likely
effect on emerging markets debt assets. The rest of this outlook
addresses those key topics.
First, it is important to define quantitative easing (QE), why
it is used, and the history of this financial weapon since the
onslaught of the global financial crisis. QE has come to be
RD12170
known as the purchase of securities by a central bank in an
attempt to stimulate domestic demand. It has only been used as
a last resort, when central banks have already cut overnight rates
to near zero (also known as the zero bound). The implementation of QE is relatively rudimentary; essentially the central bank
“prints money” and uses those funds to purchase securities from
financial institutions or public markets. Those financial institutions receive cash for their securities and, in effect, the monetary
base of the economy increases.
The hoped-for side-effects of this policy are numerous: (a) with
liquid cash instead of sometimes hard-to-sell securities, banks
will choose to increase lending which will increase the velocity
of money, (b) if QE involves the purchase by the central bank
of long-term risk-free securities, it will depress long-term yields
and, in effect, will boost asset prices through a lower discount
rate, (c) if QE involves the purchase of risk securities by the
central bank, it will boost the value of those securities and hopefully trigger “animal spirits” which in turn will trigger growth in
investments and perhaps even increases in inflation.
2
ended commitment to purchase $85 billion a month of both MBS
and long-term US Treasury bonds until labor market conditions
improved in the United States. Spread over the span of nearly two
years, this equated to just over $1.5 trillion of additional stimulus,
resulting in the largest QE to date.
Exhibit 1
Quantitative Easing Has Significantly Increased the US
Monetary Base
($T)
4.5
QE2
3.0
Operation
Twist
QE3
QE1
1.5
0
2007
2008
2009
2010
2011
2012
2013
2014
As of 3 December 2014
Source: Bloomberg (US Monetary Base ARDIMONY)
In the United States, QE was first introduced in late 2008 in an
attempt to ease policy significantly, given that the US Federal Reserve
had reached its lower bound of 0.25% on the federal funds target rate.
QE1 was directed to thaw the then-frozen real estate lending market;
the Fed announced the purchase of $600 billion of mortgage-backed
securities (MBS) as its instrument of choice (Exhibit 1). The Fed later
(in 2009) expanded QE1 to buy more MBS in addition to $300 billion of short-term US Treasury bonds. In 2010–2011, the Fed rolled
out QE2, which served a different purpose; namely the suppression
of the longer-end of the US Treasury curve through the purchase of
$600 billion of long-term Treasury bonds. The hope was that asset
prices would increase via a lower discount rate, which would boost
spending and inflation. In 2011, the Fed aimed to further suppress the
long-term risk-free yield curve through the purchase of another $400
billion (later extended to $627 billion) of long-term US Treasury
bonds. However, this time it was done in a monetary base-neutral
manner by selling an equal number of short-term bonds (hence the
moniker “Operation Twist”). Given that there wasn’t any monetary
base impact from this move, its effect was more muted than the rest
of the QE attempts. Finally, in late 2012, the Fed rolled out an open-
European QE has been discussed in markets since the global financial
crisis, but the lack of legal jurisprudence to implement this policy has
held the ECB back. That began to change when Chairman Draghi
became the head of the ECB in November 2011. Draghi has proven
to be more forceful then his predecessor (Chairman Trichet) and more
willing to use (or talk about) experimental monetary policy to achieve
the central bank’s goals. In the 6 November 2014 ECB meeting,
Draghi talked about expanding the ECB’s balance sheet by a factor of
approximately €1 trillion. This was notable because the only European
securities market with a volume large enough to achieve this goal is the
roughly €8.7 trillion sovereign bond market. Later, on 21 November
2014, Draghi gave a speech reminiscent to his “anything to save the
euro zone” speech from 2012 in which he left open all monetary
options.
The disease that Dr. Draghi is trying to cure is two-fold: first, persistently-low levels of inflation and second, declining manufacturing
and service indicators across core Europe. To solve both, stimulus is
needed, and likely includes more than just the purchases of risk-free
securities (i.e. German Bunds). Instead, Draghi will need to roll out
a large (€1 trillion certainly qualifies) program that hopefully is openended in duration, but one that significantly boosts animal spirits and
which hopefully manifests into higher inflation expectations.
The next obvious question is: what is the effect of a large, perhaps
open-ended, sovereign buying program by the ECB on emerging
markets assets? To answer this, we divide the emerging markets assets
into their requisite parts (US dollar-denominated debt, US dollardenominated high yield debt, local currency debt, emerging markets
currency, and the euro itself). Rather than use factor models to determine outcomes, we believe that the past is prologue and the very same
results from QE3 (the most similar type of US-led quantitative easing)
will likely repeat (Exhibit 2). External debt markets are likely to rally
on any credible announcement of European QE, with the riskier part
Exhibit 2
QE3 Led to an External Debt Rally
EM External Debt Returns post QE3 (Index +3.5% vs. HY Index +5.3%)
860
680
+3.5%
+5.3%
835
665
EMBIGD
810
650
EMBIGD HY
785
635
760
620
Jul 2012
Aug 2012
Sept 2012
Oct 2012
Jul 2012
Source: Bloomberg and J.P. Morgan (JP Morgan EMBIGD Index and HY sub-component; July 2012–October 2012)
Aug 2012
Sept 2012
Oct 2012
3
Exhibit 3
Emerging Markets Currency Appreciation Will Drive a Local Debt Market Rally
EM Local Returns post QE3 (Index +3.2% vs. EMFX Index +2.5%)
98
312
+3.2%
306
96
+2.5%
JPM GBI-EMGD
JPM EMCI
300
94
294
92
288
Jul 2012
Aug 2012
Sept 2012
Jul 2012
Oct 2012
Aug 2012
Sept 2012
Oct 2012
Source: Bloomberg and J.P. Morgan (JP Morgan GBI-EMGD Index and JP Morgan JPEMCI Index; July 2012–October 2012)
(high yield) of the asset class outperforming. The rally will likely be a
result of market forecasters increasing expected GDP growth rates in
Europe and hence higher growth rates for emerging markets countries
that trade with the continent. The mark-to-market moves from the
past have tended to be rapid, with most gains realized within the first
six weeks after stimulus.
Local debt markets are also likely to rally, but emerging markets currencies will make up the bulk of the return. Note that in the example
of QE3, the foreign currency spot rally was the dominant move versus
muted returns from rates (Exhibit 3). Also notable in a likely currency
rally is the quicker speed that the rally occurs (about twice as fast as
external debt). Emerging markets currencies are likely to rally, once
again, due to the pass-through effect of the hope of stronger European
growth. As has been noted in our previous monthly platform reviews,
emerging markets exports (in aggregate) are roughly equal to those
of the euro zone and the United States. Hence, what is good for
European growth is good for emerging markets exports, which is good
for emerging markets currencies.
It is important to note, however, a key distinction between potential
easing in Europe versus what has been tried repeatedly in the United
States. Because the emerging markets local debt index is denominated in US dollars (and not in euros), one must adjust returns for
any potential euro/US dollar depreciation that is likely to occur due
to added stimulus. In the case of QE3, the host country’s currency
(defined by the location of QE) tends to depreciate versus trading
partners, as the market recognizes such monetary policy action to be
another form of easing. As such, because this likely easing will occur
in Europe, we expect the euro to depreciate against the US dollar, thus
mitigating some of the strong local index returns shown in previous
graphs (Exhibit 4). In recent history, we have witnessed significant
depreciation of the Japanese yen (-10% in five weeks) after Japan’s
surprise QE announcement on 31 October 2014.
The net result of a credible, sizable stimulus by the ECB in the first
quarter of 2015 will likely be a strong, higher push for risk assets in
the three to six weeks after such announcement. In addition, given
Draghi’s modus operandi of hinting at future policy action, we believe
Exhibit 4
A Weak Euro May Dampen Strong Local Index Returns
EUR/USD Spot Rate
EUR/USD Spot Rate post QE3 (+4.4%)
1.32
+4.4%
1.28
1.24
1.20
Jul 2012
Aug 2012
Sept 2012
Oct 2012
Source: Bloomberg (EUR/USD spot rate; July 2012–October 2012)
that emerging markets assets will begin to rally prior to the meeting
date. We must caution, however, that the addition of external and
local risk to capture these potential positive returns is purely a tactical
shift in our strategies that is unlikely to persist for more than one quarter. Rather, history has proven the short-lived longevity of monetary
stimulus, and the first round typically leads to follow-on attempts in
the quarters and years ahead. As such, we intend to add local debt
across the multi-asset class portfolios in the weeks leading up to what
we believe will be a strong European stimulus announcement; the
form of local market buys will likely be heavily weighted to foreign
currencies versus bonds, and when possible, will be hedged with shorts
against the euro. We will likely focus the additional currency exposure on non-Euro bloc currencies and high-beta emerging markets
currencies. In external debt, we intend to add exposure to Euro bloc
sovereigns, in addition to maintaining current large positions in high
yield sovereign and corporate emerging markets debt.
4
Strategy Positioning and Performance
Core
negative return being entirely due to currency depreciation (-2.6%).
Duration exposure contributed positively to the index’s performance
as yields generally declined thanks to lower inflation expectations.
The Lazard Emerging Markets Debt – Core strategy underperformed
the J.P. Morgan EMBI Global Diversified Index in November. Even
though index returns were essentially flat, November saw a widening
of spreads as a confluence of negative factors affected many emerging
markets. For the first time since February, the index spread crossed
the 300 basis point (bps) threshold, ending the month at 310 bps.
Those losses were fully offset by further, albeit modest, tightening of
US Treasuries. As a result, there was a notable divergence in returns
between the investment-grade component of the index, whose returns
were positive, and the high yield component, whose returns were
negative.
In currencies, the drop in oil prices made the Russian rouble, the
Nigerian naira, and the Colombian peso the three worst-performing
currencies, due to the heavy exposure of these countries’ exports to
oil. On the other hand, the best emerging markets currency performers included the Turkish lira, the Polish zloty, and the South African
rand. Both the lira and the rand are expected to be beneficiaries of
lower oil prices due to the sizable share of oil in their import bill.
Meanwhile the zloty benefited from a relatively resilient performance
of the euro in November, as well as a surprise decision by the central
bank to keep rates unchanged, against consensus expectations for a 25
bp interest rate cut.
The precipitous and deeper-than-expected fall in oil prices was the
dominant theme during November, culminating in OPEC’s decision
against cutting supply on 27 November. Steep losses in Venezuela
were the largest detractor from relative performance. The strategy was
overweight Venezuela based on country-specific valuation considerations, given that spreads were near default levels. Also, we took the
view that—after falling 23% in four months—oil prices would stabilize given that the slowdown in China and Europe has already been
fully incorporated in expectations. Further, we did not fully anticipate
the importance of geopolitical drivers in OPEC’s decision. These views
were clearly wrong.
Emerging markets local rates mostly tracked the decline in G10 yields,
in line with the disinflationary environment generated by lower oil
prices. The best-performing local markets were those markets where
the benefits from lower oil prices should be seen the most, notably
Turkey, India, and South Africa. Local rates markets in Brazil and
Colombia also performed well. In the case of Brazil, the rally was
mostly in the back end of the curve, on expectations that the recently
re-elected President Dilma Rousseff would appoint a more marketfriendly finance minister who would focus on fiscal consolidation.
In Colombia, falling oil prices and a more dovish central bank have
now prompted expectations for a potential rate cut next year, pushing the front and middle part of the local curve considerably lower.
Meanwhile, the worst-performing local rates markets in November
were Nigeria and Russia. Nigeria and Russia saw very heavy currency
pressure from capital outflows, which in turn pushed local yields
higher on the back of higher inflation expectations and credit risk
premia.
The second-largest detractor from performance was the strategy’s longstanding underweight to investment-grade credits, which benefited
from the continued rally in US Treasuries. Among investment grade
credits, oil importers fared well, especially Indonesia and South Africa.
Russia, where the strategy exposure is market weight, took another
major hit in November, as the credit is impacted by both sanctions
and oil prices. Even the Russian government is revising its growth projections for next year, and is now forecasting a recession and higher
inflation. Spreads on Russia, where the government has essentially
no debt, ended November at the same level as some of the African
oil producers whose policy frameworks and resilience to shocks is
far more dubious. Corporates were the third-biggest contributor to
underperformance. We have held off-index exposure, on average 15%
of the portfolio, since June. Poor performance has been driven by the
strategy’s nearly 25% allocation to oil companies.
Given the new realities, we are in the process of reducing our exposure
to oil sovereigns, including Ecuador, Angola, Bahrain, Venezuela, and
Azerbaijan. We are replacing those positions with investment-grade
credits and exposure to countries that will be clear beneficiaries of
lower oil prices, such as Indonesia and Turkey. In addition, we are
encouraged by the reduction in subsidies announced in November
by the new administration, which will make room for much-needed
investment-related expenditures. Turkey, despite its less than ideal
political backdrop, is also likely to benefit from lower energy prices, as
already evident in the ongoing narrowing of its current account deficit.
Local Debt
The sharp drop in oil prices in November was the key driver of returns
in emerging markets local bonds in November. On aggregate, the J.P.
Morgan GBI-EM Global Diversified Index was down 1.31%, with the
Within the GBI-EM Global Diversified Index, the best performers
in rates were Turkey, Colombia, and Indonesia. Indonesia performed
well as local yields declined, largely due to the Jokowi administration’s
decision to partially eliminate fuel subsidies, which was received positively by the market. Indonesia also delivered higher returns because
of the country’s longer duration in the index. The worst performers in
the rates markets were Nigeria, Russia, and Malaysia, mainly due to
the drop in oil prices.
Lazard’s local strategy performed in line with the index in November.
The biggest contributors to performance were an underweight position in the Nigerian naira, an overweight in Indonesian rates, and an
underweight in Malaysian rates and its currency. We underweighted
the naira on valuation grounds, which were exacerbated by the
persistent drop in oil prices, forcing the central bank to accept a
downward currency adjustment. In Indonesia our active performance
benefited from an overweight position in local rates. This position was
driven by our view that positive sentiment about the reform agenda
of the incoming Jokowi administration—which could have very
positive structural implications for Indonesia’s fiscal, inflation, and
competitiveness dynamics, along with a relatively orthodox central
bank—should benefit both the currency and the local rates curve. The
biggest detractors from performance were our underweight position
in Turkish local rates, our overweight position in Mexican rates and
its currency, and our overweight position in Brazilian rates. In Turkey
5
we had already reduced part of our underweight rates exposure in
October, as we saw falling oil prices as beneficial for Turkey’s inflation
and external outlook, but had not eliminated it fully due to the apparent persistence of underlying inflation pressures. In any case, oil prices
fell even further in November, and quite sharply, prompting a fresh
rally in Turkish rates. In Mexico the currency was challenged by the
drop in oil prices and concerns that the difficult security environment
in Mexico, which prompted protests against the government, would
undermine the political capital President Peña Nieto’s administration.
The peso depreciated in November, raising expectations of higher
inflation, which in turn translated into the underperformance of the
local rates curve. In Brazil our underperformance was driven mainly
by security selection, notably our structural preference for inflation
linkers, which underperformed in November as breakeven inflation
declined in November, partly due to the fall in oil prices. In addition,
our preference for shorter-term tenors, which had been driven by our
expectation that the front part of the curve reflects too many central
bank hikes, hurt our active performance as the back end of the curve
rallied disproportionately, partly due to investor expectations for the
appointment of a more orthodox Minister of Finance.
Going into December, we believe the environment remains challenging for emerging markets currencies due to uncertainty about
global demand, notably in the euro zone and China, the impact of
falling commodity prices on emerging markets currencies, and the
timing and pace of the Fed’s tightening cycle. We therefore retain
our overall long US dollar position, expressing it mainly by funding
with euros but also by being long currencies such as the Indian rupee,
where we believe there is positive idiosyncratic risk, or the Mexican
peso, where we believe valuation remains attractive. In rates, we see
potential structural opportunities in Indonesia and Brazil and we still
see potential for further cyclical-related duration gains in Hungary.
In Indonesia the structural opportunity arises from the central bank’s
stated commitment to a lower inflation target, which is currently
being helped by lower global oil prices. The government’s decision in
November to partially eliminate fuel subsidies should also help reduce
the historically high volatility in inflation, lowering the term premium
in Indonesia’s rates. In Brazil, we continue to see opportunity in local
real yields and also some potential upside on the fiscal front from the
more orthodox appointments at the ministry of finance. In Hungary,
we believe that the low inflation environment, along with additional
action from the ECB, should benefit local rates further, particularly
longer-term tenors that have higher yield. In Mexico we continue to
favor local rates on the grounds of potential spread convergence with
US yields, however the recent depreciation of the peso could undermine the inflation convergence process in the near term, and we have
reduced our overweight rates position.
Blend
The Lazard Emerging Markets Debt – Blend strategy underperformed
the 50% J.P. Morgan EMBI Global Diversified/50% J.P. Morgan
GBI-EM Global Diversified Index in November. In what was a repeat
of October’s performance, the strategy realized positive alpha from the
top-down macro allocation position, however the strategy lost more
than it gained due to poor bottom-up security selection. The overall
top-down view was little changed during the month, with historically high allocations to external debt. The strategy remained at 70%
external debt versus 30% local debt in November and ran a slight
overweight duration position. This positioning is due to our continued
view that emerging markets currencies are going through a negative
adjustment period, which will likely manifest in cheaper currency
valuations (versus the US dollar) in the near term. Meanwhile, in the
external part of the portfolio, the 15% overweight to corporate debt
detracted from performance as the strategy’s underlying investments
underperformed the corporate space in general. This was largely due to
an overweight to the oil and gas sector, which underperformed due to
the near-20% fall in Brent oil prices during November. The secondlargest detractor of performance was the long-held overweight in
Venezuelan sovereign bonds, which was the market’s worst performer
for the month. The strategy ended November with a 70% allocation
to external debt versus a 30% allocation to local debt and an overall
duration equal to that of the index.
Total Return
The Lazard Emerging Markets Debt – Total Return strategy declined
0.48% in November, in what has been a three-month period of
choppy returns. Overall, we maintained roughly constant positions
throughout the month, thus introducing very little turnover into
the strategy. Net exposure was 90% at month-end, which consisted
of a 95% net long position in external debt versus a -5% net short
position in local debt. We continue to favor external debt due to our
view that global yields will continue to fall as commodity and other
cost pressures are reduced through year end. Local debt yields are
also attractive, however, most of the carry of the asset class is likely to
be erased by depreciating emerging markets currencies over the near
term. It should be noted that the portfolio was able to protect against
a larger drawdown in the asset class because of currency hedges on its
local positions, along with a basket of long duration investment-grade
bonds as part of the strategy’s external debt positioning.
Corporate
The Lazard Emerging Market’s Debt – Corporate strategy declined
1.50% in November as emerging markets credits, particularly in the
high yield space, continued the prior month sell-off. As US Treasury
yields declined during the month, emerging markets corporate spreads
widened 10 bps for investment-grade credits and over 30 bps for high
yield credits.1 The risk-off sentiment was fueled by the continuing
slide in oil prices, corruption scandals in Brazil, and a collapse of the
rouble, which signaled deterioration in Russian credits. Following no
agreement among OPEC members to cut oil production at the 27
November meeting in Vienna, oil prices ended the month at $68.50/
bbl, the lowest level in nearly five years. Investors reacted by selling
credits with exposure to the oil and gas sector. High yield oil and gas
credits returned -1.6% for the month and investment-grade credits
were down 0.5%. The strategy’s exposure to Russian corporate credits
detracted 50 bps from performance. Russian corporate credit spreads
reached 600 bps at the month end surpassing the spread moves in
March and April of this year when Russia annexed Crimea and faced
Western sanctions. Finally, Brazilian authorities initiated a corruption
probe into Petrobras, the state-owned oil and gas company, and several construction companies. The allegations against these companies
are that their top executives overcharged Petrobras for several construction projects in amounts that are estimated to be several billion
dollars. Overall, Brazilian corporate credit returned a negative 2.14%
for the month.2
6
Despite the volatility in emerging markets corporate markets, several
issuers brought successful new issue deals, particularly in investmentgrade credit, as investors were looking to diversify away from high
yield and energy credits. One such deal was brought by an investmentgrade issuer, Gruma, which is the world largest corn flour and tortilla
maker based in Mexico. Gruma has a well-diversified portfolio of
products as well as sales outlets and holds market leader positions in
Mexico and the United States with over 25% market share. Over the
past couple of years, Gruma’s management team has focused on deleveraging its balance sheet and reducing the cost of the company’s debt.
The company reduced its leverage from 4.8 in 2012 to 1.9 as of the
fourth quarter of 2014. During our meeting with the company, the
new management team, which has been in place since 2012, reiterated
the company’s focus to maintain a strong balance sheet going forward
and bring leverage closer to 1.5 total debt over EBTIDA.3 The company has been successful at cutting expenses and reducing working
capital needs. As a result, Gruma has become a highly cash-generative
business with over US $400 million in free-cash flows annually.
Should the company’s plans for a successful IPO materialize in 2015,
we expect its leverage to reach 1.5 as the company’s management team
plans to commit the proceeds from the IPO to further strengthen the
company’s balance sheet. The key credit risk is the company’s plan
to expand in Europe where it is likely to acquire targets and/or assets
and thus spend cash, negatively affect the company’s liquidity profile.
The company is also planning to introduce a dividend going forward
(expected US $50 million) thus also affecting its liquidity profile.
Finally, while the company claims to be able to pass any corn costs
to its consumers, we believe that in the case of weak macro-economic
or demand conditions, the company may experience significant lags
with which it can pass on raw material (corn) costs to its customers.
Given the strong credit profile of the company, investors showed
strong interest in Gruma’s new issue deal (a total of US $400 million
issued) and order books were several times oversubscribed. The newly
issued notes were in favor in the secondary market as well as spreads
compressed over 35 bps in just a few days following the launch of the
new issue.
Overall, we expect continued volatility in emerging markets corporate
credit as we approach year end as investors remain unwilling to take
on risk. However, we believe that corporate credits have now priced in
lower energy prices and deterioration in Russia and Brazil.
Sincerely,
Denise S. Simon
Managing Director, Portfolio Manager/Analyst
Arif T. Joshi, CFA
Managing Director, Portfolio Manager/Analyst
George V. Varino
Managing Director, Client Portfolio Manager
7
Emerging Markets Debt – Core
Sector Allocation
Characteristics
Lazard
Yield to Maturity1 (%)
6.50
5.27
Duration (yrs)
7.39
7.03
Average Coupon (%)
6.31
6.20
Cash
1.3%
External
Corporate
15.0%
Benchmark3
External
Quasi
8.2%
External
Sovereign
75.6%
Key Hard Currency Exposure
Sovereign and Quasi-Sovereign
Lazard O/W
or U/W (%)
Venezuela
2.0
Bahrain
2.0
Côte d’Ivoire
1.8
Bolivia
1.7
Pakistan
1.5
Honduras
1.2
Mozambique
1.1
Iraq
1.0
Belarus
1.0
Croatia
-2.0
Uruguay
-2.1
Chile
-2.1
Malaysia
-2.4
Peru
-2.5
Lebanon
-2.7
Philippines
-3.3
South Africa
-3.3
China
-3.5
Quality Distribution
(%)
60
54.7
42.1
40
23.2 24.2
0
13.6
Investment
Grade
Lazard
BB
B
9.2
6.7
CCC
4.0
0.8
Not Rated
J.P. Morgan EMBI Global Diversified Index
Performance Attribution3
Sovereign Hard Currency
Corporate
21.6
20
Overweight/Underweight
1 Month
(bps)
YTD
(bps)
1 Year
(bps)
Since Inception²
(bps)
-40
-43
-10
129
-34
-41
-16
129
Russia
2.2
-6
-2
6
-2
Mexico
2.0
Local Debt
0
-3
-3
-16
China
1.7
Rates
0
0
0
15
Chile
1.4
Brazil
1.3
Nigeria
0.9
Guatemala
0.7
Vietnam
0.6
Egypt
0.5
Indonesia
0.5
Security Selection
FX
Corporates
0
-3
-3
-31
-10
-63
-70
-16
Cash
0
-23
-29
-7
Total
-50
-131
-113
90
As of 30 November 2014
1 All yields are calculated assuming yield-to-worst.
2 Inception date: 1 December 2010
3 Relative to the J.P. Morgan EMBI Global Diversified Index.
The allocations and specific securities are based upon a portfolio that represents the proposed investment for a fully discretionary account. Allocations and security selection are subject to change.
Attribution is based upon a representative portfolio and is versus the benchmark noted. Attribution analysis is provided for illustrative purposes only, as values are calculated based on returns gross of
fees. Performance would be lower if fees and expenses were included. Past performance is not a reliable indicator of future results.
Lazard receives credit quality ratings on the underlying securities of the portfolio from two major reporting agencies – Standard & Poor’s (S&P) and Moody’s. The credit quality breakdown is provided
by Lazard by using the S&P rating when both agencies assign the same rating to a security. In the event the ratings differ, Lazard will use the lower of the two ratings. Lazard converts all ratings to
the equivalent S&P major rating category for purposes of the categories shown. Bonds rated BBB and above are considered investment grade. Bonds rated below BBB are generally referred to as
speculative grade securities. Bonds rated BB, B, or CCC are regarded as possessing a speculative capacity to pay debt service because of the negative factors or uncertainties for which there are no
compensating positive factors. Ratings from BBB to CCC may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within each of the major rating categories. An N/R
category consists of rateable securities that have not been rated by a Nationally Recognized Statistical Rating Organization (NRSRO). Unrated securities do not necessarily indicate low quality. Ratings
and the portfolio’s credit quality distribution may change over time. The portfolio itself has not been rated by an independent rating agency.
Source: Lazard, J.P. Morgan
8
Emerging Markets Debt – Local Debt
Characteristics
Lazard
Benchmark3
(%)
6.62
5.01
6.23
4.87
Average Coupon (%)
6.37
6.49
Maturity1
Yield to
Duration (yrs)
Gross Currency Exposure
Sovereign and Quasi-Sovereign
India
Mexico
Indonesia
Russia
Turkey
Kenya
Brazil
Serbia
Chile
Sri Lanka
South Africa
Philippines
Colombia
Poland
Romania
Nigeria
Peru
Thailand
Malaysia
Singapore
Hungary
Euro
Key Duration Exposure
Kenya
China
Sri Lanka
Mexico
Romania
Brazil
Serbia
Thailand
Colombia
Chile
Turkey
Indonesia
Philippines
Gross Regional Allocation
(%)
30
28.4
24.7
23.6
21.0
20
10
Lazard O/W
or U/W (%)
0
3.0
0.9
0.4
0.2
0.2
0.1
0.1
0.1
0.1
0.1
0.0
0.0
-0.1
-0.2
-0.6
-0.7
-1.0
-1.1
-1.5
-1.5
-1.6
-4.6
Eastern Europe
Latin America
Middle East
& Africa
Gross Sector Allocation
(%)
100
91.6
50
0.7
0
4.9
0.6
7.7
0.0
-5.4
-50
Sovereign Quasi-Sov Corporate Inflation
Interest Forwards/
Bonds
Bonds
Bonds
Linked Rate Swaps NDFs/
Options
USD
Cash
Gross Quality Distribution
(%)
60
Lazard O/W
or U/W (yrs)
5.3
4.1
2.8
1.6
1.3
1.3
1.2
-0.2
-0.4
-0.6
-0.7
-1.0
-1.2
Asia
57.8 54.5
38.5
40
26.0
20
0
9.0
7.0
6.9
0.2
BB
0.0
B and Below
0.0
AAA/A
BBB
Not Rated
Lazard
J.P. Morgan GBI-EM Global Diversified Index
1 Month
(bps)
YTD
(bps)
1 Year
(bps)
Rates
-6
32
33
8
FX
1
43
43
69
-5
75
76
77
Total
Since Inception²
(bps)
3 Relative to the J.P. Morgan GBI-EM Global Diversified Index.
9
Historical Allocation
Characteristics
Lazard
Benchmark3
7.03
5.75
Duration (yrs)
6.70
5.95
Average Coupon (%)
6.55
6.35
Hard Currency (%)
69.10
50.00
Local Currency (%)
30.90
50.00
(%)
75
50
Key Country Distribution
1.9
Brazil
1.7
Honduras
1.1
Mozambique
1.1
Bahrain
1.1
Pakistan
1.0
Slovenia
1.0
Senegal
1.0
Peru
-0.7
Serbia
-0.8
Indonesia
-0.8
Uruguay
-1.0
Philippines
-1.5
Lebanon
-1.6
South Africa
-1.6
Romania
-2.2
Poland
-2.4
Thailand
-3.3
Hungary
-4.1
Malaysia
-6.2
Sep 14
Local Currency Exposure
Sector Allocation
(%)
50
49.3
27.4
25
14.9
4.2
0
0.8
0.6
2.0
0.1
0.7
Cash
2.0
Venezuela
Mar 14
Forwards/NDFs
Iraq
Hard Currency Exposure
Sep 13
Local Inflation
Linked
2.2
Mar 13
Local Corporate
Bonds
Côte d’Ivoire
Sep 12
Local QuasiSovereign
2.3
Mar 12
Local Nominal
Sovereign
Russia
Sep 11
Corporate
Bonds
2.6
External
Quasi
Mexico
25
External
Sovereign
Lazard O/W
or U/W (%)
2 Inception date: 1 October 2011
3 Relative to a blended index consisting of 50% J.P. Morgan EMBI Global Diversified/50% J.P. Morgan GBI-EM Global Diversified Index.
10
Quality Distribution
(%)
80
1 Month
(bps)
YTD
(bps)
1 Year
(bps)
Since Inception1
(bps)
17
43
52
98
-15
-81
-85
-2
-17
-56
-52
27
2
-25
-33
-29
-27
-71
-80
7
Local Debt
10
-4
23
20
Rates
-12
-18
-9
-19
FX
22
15
34
39
Total
-14
-113
-90
123
Overall Allocation –
Hard vs. Local
Sovereign Hard Currency
Overweight/Underweight
Security Selection
Corporate Hard Currency
60
73.9
57.5
40
16.3 15.6
20
16.7
6.8
0
Investment
Grade
Lazard
BB
B
5.6
3.3
CCC
3.8
0.4
Not Rated
50% JPM EMBI Global Diversified/
50% JPM GBI-EM Global Diversified Index
1 Inception date: 1 October 2011
2 Relative to a blended index consisting of 50% J.P. Morgan EMBI Global Diversified/50% J.P. Morgan GBI-EM Global Diversified Index.
11
Currency Exposure
Characteristics
United States
Lazard (%)
Lazard
Yield to
Maturity1
(%)
6.49
Duration (yrs)
7.07
Average Coupon (%)
6.21
Long Exposure (%)
118.27
Short Exposure (%)
28.30
Net Exposure (%)
89.97
Gross Exposure (%)
146.57
Cash (%)
0.00
Key Hard Currency Exposure
Sovereign and
Quasi-Sovereign Net
% of Market Value
Corporate
Net % of
Market Value
Total
Net % of
Market Value
Brazil
7.42
3.43
10.85
CDX
7.52
—
7.52
Mexico
1.51
4.81
6.32
Russia
1.74
3.09
4.83
China
—
3.84
3.84
Iraq
2.50
1.30
3.79
Colombia
2.01
1.60
3.61
Portugal
3.51
—
3.51
Paraguay
2.51
0.31
2.82
Bahrain
2.50
—
2.50
Venezuela
2.34
—
2.34
Côte d’Ivoire
2.26
—
2.26
99.29
India
6.37
Indonesia
5.97
Mexico
2.91
Brazil
2.09
China
2.07
Chile
1.01
South Africa
0.54
Serbia
0.16
Kenya
0.16
Sri Lanka
0.11
Romania
0.01
Russia
-0.01
Philippines
-0.16
Canada
-0.52
Taiwan
-0.83
Hungary
-1.06
Japan
-1.32
Peru
-1.36
Malaysia
-2.33
Thailand
-3.10
Singapore
-5.84
Euro
-9.59
Key Local Debt Positions
Bond (%)
IRS (%)
FX (%)
% of Total
Market Value
Mozambique
2.24
—
2.24
India
—
—
3.74
3.74
Ecuador
2.22
—
2.22
Indonesia
2.45
—
0.88
3.33
Kazakhstan
1.00
1.14
2.14
Brazil
1.34
—
0.75
2.09
1.27
—
0.71
1.98
0.16
Panama
1.75
0.31
2.06
Mexico
Indonesia
1.00
1.02
2.02
Serbia
0.92
—
-0.76
Bolivia
2.00
—
2.00
Kenya
0.16
—
—
0.16
Turkey
2.00
—
2.00
Malaysia
0.45
—
-2.00
-1.55
Angola
1.98
—
1.98
Singapore
—
—
-4.15
-4.15
Euro
—
—
-8.08
-8.08
Key Relative Value Exposures
% of Market Value
Indonesia
2.64
India
2.63
China
2.07
Thailand
2.05
Singapore
1.69
Chile
1.01
Mexico
0.93
Canada
-0.52
Euro
-1.51
12
(%)
50
Hard Currency
YTD
(bps)
1 Year
(bps)
Since
(bps)
-61
392
415
363
Long Sovereign
11
427
438
277
Short Sovereign
-4
-67
-67
-6
Quasi-Sovereign
-12
23
24
32
Long Corporates
-56
9
19
60
Short Corporates
0
0
0
-1
Local Debt
Long Rates
Short Rates
10
86
91
130
11
158
167
158
0
-1
-1
-4
Long FX
-20
-77
-92
-52
Short FX
19
5
16
27
4
68
69
40
Relative Value
41.6
31.7
24.1
25
0
Asia
0
0
0
0
(%)
Total
-48
546
574
533
60
Latin America
Middle East
& Africa
50.9
40
Historical Gross Exposure Allocations
Eastern Europe
Cash
(%)
180
49.2
Inception1
29.8
20
0.7
0.0
0.0
Interest Rate
Swaps
0.0
CDS
Hard Currency
Sovereign
90
1.3
CDX
0
Local Corporate
Bonds
Relative Value
135
11.7
7.4
Local QuasiSovereign Bonds
Short Local
4.9
Local Inflation
Linked Bonds
Long Local
6.6
Local Nominal
Sovereign Bonds
Short Credit
Hard Currency
Corporate
Long Credit
Hard Currency
Quasi-Sovereign
Cash
0.0
Cash
Performance Attribution
1 Month
(bps)
FX/NDFs/Options
45
0
2010
2011
2012
2013
2014
Historical Long/Short Exposures
(%)
160
Short
Net
124
110
111
111118
109108
101
98
95 95
97
96
96
91
84
92
90
92
89
89
88
86
86
90
88
83
85
83
81
79 79 83 85
76
76 80 69
75
94
80
80
89
67 66 68 66
65
100
86
62 53
60
82
56
88
51
72
70
74
63
78
64 68 77
67 64 71 74 80
59
60 63
67
36
57 49
53 64
55
56 60
57
52 63
47 71
47 46
51
44
34
42
52
36 35
30
23 51
0
-4 -1 -3 -3
-5 -11 0
-6 -5
-11 -12 -10 -14
-12 -10 -8 -15
-15
-16 -17 -16 -22 -19 -18 -21
-15
-21 -28 -23 -23 -21 -24
-24
-23 -31
-25
-27
-31-28
-28
-33
-36 -31
-52 -43 -53
-58
-61
-65
-80
Nov 10
Dec 10
Jan 11
Feb 11
Mar 11
Apr 11
May 11
Jun 11
Jul 11
Aug 11
Sep 11
Oct 11
Nov 11
Dec 11
Jan 12
Feb 12
Mar 12
Apr 12
May 12
Jun 12
Jul 12
Aug 12
Sep 12
Oct 12
Nov 12
Dec 12
Jan 13
Feb 13
Mar 13
Apr 13
May 13
Jun 13
Jul 13
Aug 13
Sep 13
Oct 13
Nov 13
Dec 13
Jan 14
Feb 14
Mar 14
Apr 14
May 14
Jun 14
Jul 14
Aug 14
Sep 14
Oct 14
Nov 14
Long
There is no benchmark for this strategy as it has an absolute return investment objective.
The allocations and specific securities are based upon a portfolio that represents the proposed investment for a fully discretionary account. Allocations and security selection are subject to
change. Contribution is based upon a representative portfolio. Contribution analysis is provided for illustrative purposes only, as values are calculated based on returns gross of fees. Performance
would be lower if fees and expenses were included. Past performance is not a reliable indicator of future results.
13
Emerging Markets Debt – Corporate
Characteristics
Lazard
7.81
Duration (yrs)
4.41
Average Coupon (%)
7.35
(%)
100
94.7
50
0
Hard Currency
Corporate Bonds
Total Country Distribution
2.0
3.3
Hard Currency
Quasi-Sovereign Bonds
Cash
Lazard (%)
Mexico
13.5
China
12.3
Russia
9.1
Brazil
9.1
Nigeria
6.6
Indonesia
4.9
Chile
4.6
Singapore
3.9
Colombia
3.1
Peru
3.1
Venezuela
2.8
Iraq
2.7
Bulgaria
2.6
Guatemala
2.5
Ghana
2.4
Gross Quality Distribution
(%)
30
Financial
24.2
Oil & Gas
23.6
15.7
10
0
4.4
Investment
Grade
BB
B
CCC
Not Rated
(%)
50
25
41.7
25.1
15.7
14.2
3.3
0
Asia
Eastern
Europe
Utilities
8.7
TMT
8.5
Real Estate
6.7
Consumer
6.0
Metals & Mining
5.3
Transport
3.5
Pulp & Paper
3.2
Industrial
3.1
Investment Grade
Infrastructure
2.0
Below Investment Grade
Other
2.0
Cash
3.3
Latin
America
Middle East
& Africa
Cash
Performance Attribution
Corporate
Quasi-Sovereign
Investment Grade
1 Month
(bps)
YTD
(bps)
1 Year
(bps)
Since Inception²
(bps)
-128
343
409
540
-17
74
82
178
-111
269
327
362
-22
-28
-26
1
0
5
5
-33
-22
-33
-31
34
Cash
0
0
0
0
Total
-150
315
383
541
Below Investment Grade
2 Inception date: 1 November 2011
There is no benchmark for this strategy as it has an absolute return investment objective.
27.9
20
Industry Exposure
Lazard (%)
29.3
22.7
Contribution is based upon a representative portfolio. Contribution analysis is provided for illustrative purposes only, as values are calculated based on returns gross of fees. Performance
would be lower if fees and expenses were included. Past performance is not a reliable indicator of future results.
Lazard receives credit quality ratings on the underlying securities of the portfolio from two major reporting agencies – Standard & Poor’s (S&P) and Moody’s. The credit quality breakdown is
provided by Lazard by using the S&P rating when both agencies assign the same rating to a security. In the event the ratings differ, Lazard will use the lower of the two ratings. Lazard converts
all ratings to the equivalent S&P major rating category for purposes of the categories shown. Bonds rated BBB and above are considered investment grade. Bonds rated below BBB are generally
referred to as speculative grade securities. Bonds rated BB, B, or CCC are regarded as possessing a speculative capacity to pay debt service because of the negative factors or uncertainties for
which there are no compensating positive factors. Ratings from BBB to CCC may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within each of the major rating categories. An N/R category consists of rateable securities that have not been rated by a Nationally Recognized Statistical Rating Organization (NRSRO). Unrated securities do not necessarily
indicate low quality. Ratings and the portfolio’s credit quality distribution may change over time. The portfolio itself has not been rated by an independent rating agency.
Lazard Emerging Markets Debt
Notes
1 Source: J.P. Morgan CEMBI Index
2 Source: J.P. Morgan CEMBI Brazil Index
3 Earnings before interest, taxes, depreciation, and amortization
Important Information
Published on 16 December 2014.
Information and opinions presented have been obtained or derived from sources believed by Lazard to be reliable. Lazard makes no representation as to their accuracy or completeness. All opinions
expressed herein are as of 30 November 2014 and are subject to change.
Lazard Asset Management LLC is a US registered investment advisor and claims compliance with the Global Investment Performance Standards (GIPS®). To receive a complete list and description of Lazard Asset Management’s composites and/or a presentation that adheres to the GIPS standards, please contact Henry F. Detering, CFA at Lazard Asset Management, 30 Rockefeller
Plaza, New York, New York 10112-6300 or by email at [email protected]. Provided below are descriptions of each of the composites, the performance of which appears on the preceding pages.
The Emerging Markets Debt – Core strategy seeks to outperform the benchmark, the J.P. Morgan Emerging Market Bond Index Global Diversified (EMBI Global Diversified), by +2%–4% p.a.
over a market cycle, with a tracking error of 2%–4%. The majority of the portfolio (typically 75%–100%) will be held in hard currency emerging-market debt. Typically, 0%–25% may be held in
local currency emerging market debt. Despite being benchmark-aware, the strategy is free to invest out of the benchmark (maximum non-benchmark exposure is 40%) to allow the investment
team to exploit the full universe of evolving opportunities. Key drivers of return for this strategy are moves in US Treasuries and credit premiums.
The Emerging Markets Debt – Local Debt strategy seeks to outperform the benchmark, the J.P. Morgan Government Bond Index-Emerging Markets (GBI-EM) Global Diversified, by +2%–4%
p.a. over a market cycle, with a tracking error of 2%–6%. The majority of the portfolio (typically 80%–100%) will be held in local currency debt. Typically 0%–20% may be held in hard currency
debt. Despite being benchmark-aware, the strategy is free to invest out of the benchmark (maximum non-benchmark exposure is 50%) to allow the investment team to exploit the full universe
of evolving opportunities. Key drivers of return for this strategy are currency appreciation/depreciation and interest-rate moves.
The Emerging Markets Debt – Blend strategy seeks to outperform the 50/50 benchmark of the J.P. Morgan Emerging Market Bond Index Global Diversified (EMBI Global Diversified) and
J.P. Morgan Government Bond Index-Emerging Markets (GBI-EM) Global Diversified by +2%–4% p.a. over a market cycle, with a tracking error of 2%–5%. The portfolio may hold 25%–75%
in either hard currency or local currency debt, depending on the outlook for each asset class. Despite being benchmark-aware, the strategy is free to invest out of the benchmark (maximum
non-benchmark exposure is 40%) to allow the investment team to exploit the full universe of evolving opportunities. Key drivers of return for this strategy are moves in US Treasuries, credit premiums, growth, and inflation expectations within emerging-market countries. The strategy may hold up to 25% in corporate securities.
The Emerging Markets Debt – Total Return strategy has no benchmark and uses a “best ideas” approach. The investment team looks across the entire emerging-market debt universe — hard
currency sovereign debt, hard currency quasi-sovereign debt, local currency sovereign debt, local currency quasi-sovereign debt, corporate debt, etc. — positioning the portfolio in the specific
asset classes and countries in which the team sees value. This is in contrast to the team’s benchmark-aware approaches, in which countries are overweighted or underweighted. The Emerging
Markets Debt – Total Return strategy is a long-biased approach that seeks to capture upside performance and minimize negative performance. The strategy is allowed some leverage (up to
200% maximum gross exposure) and shorting. It has typically been run with a 60%–90% net exposure and 100%–140% gross exposure. The team may invest in all emerging-market debt asset
classes, but also has the ability to allocate tactically to cash, if the team has no conviction in the market.
The Emerging Markets Debt – Corporate strategy is a long-biased approach, that seeks to capture upside performance and minimize negative performance. The strategy is allowed some leverage (up to 200% maximum gross exposure) and shorting. It has typically been run with a 60%–90% net exposure and 100%–140% gross exposure. The team may invest throughout the EMD
corporate asset class, but also has the ability to allocate tactically to cash if the team has no conviction on the market.
Emerging-market securities carry special risks, such as less developed or less efficient trading markets, a lack of company information, and differing auditing and legal standards. The securities
markets of emerging-market countries can be extremely volatile; performance can also be influenced by political, social, and economic factors affecting companies in emerging-market countries.
Specific to the political and military unrest in Ukraine, and as described in this presentation, there exists a heightened risk of armed conflict and subsequent economic, political, and
social repercussions to all parties involved.
The strategies invest primarily in emerging-market debt positions. The strategies will generally invest in debt investments denominated in either US dollars or emerging-market local currencies.
As such, an investment in the strategies is subject to the general risks associated with fixed-income investing, such as interest rate risk and credit risk, as well as the risks associated with emerging-market investments, including currency fluctuation, devaluation, and confiscatory taxation. The strategies may use derivative instruments that are subject to counterparty risk.
Investments in global currencies are subject to the general risks associated with fixed-income investing, such as interest rate risk, as well as the risks associated with non-domestic investments,
which include, but are not limited to, currency fluctuation, devaluation, and confiscatory taxation. Furthermore, certain investment techniques required to access certain emerging-market currencies, such as swaps, forwards, structured notes, and loans of portfolio securities, involve risk that the counterparty to such instruments or transactions will become insolvent or otherwise default
on its obligation to perform as agreed. In the event of such default, an investor may have limited recourse against the counterparty and may experience delays in recovery or loss.
The strategies will invest in securities of non-US companies, which trade on non-US exchanges. These investments may be denominated or traded in both hard and local currencies. Investments
denominated in currencies other than US dollars involve certain considerations not typically associated with investments in US issuers or securities denominated or traded in US dollars. There
may be less publicly available information about issuers in non-US countries that may not be subject to uniform accounting, auditing, financial reporting standards, and other disclosure requirements comparable to those applicable to US issuers.
The allocations, investment characteristics, and specific securities mentioned are based upon a portfolio that represents the proposed investment for a fully discretionary account. Allocations
and security selection are subject to change. The securities mentioned are not necessarily held by Lazard for all client portfolios, and their mention should not be considered a recommendation or
solicitation to purchase or sell these securities. It should not be assumed that any investment in these securities was, or will prove to be, profitable, or that the investment decisions we make in
the future will be profitable or equal to the investment performance of securities referenced herein. There is no assurance that any securities referenced herein are currently held in the portfolio
or that securities sold have not been repurchased. The securities mentioned may not represent the entire portfolio.
All index data is shown for illustrative purposes only and is not intended to reflect the performance of any product or strategy managed by Lazard.
This material is for informational purposes only. It is not intended to, and does not constitute financial advice, fund management services, an offer of financial products or to enter into any
contract or investment agreement in respect of any product offered by Lazard Asset Management and shall not be considered as an offer or solicitation with respect to any product, security, or
service in any jurisdiction or in any circumstances in which such offer or solicitation is unlawful or unauthorized or otherwise restricted or prohibited.
Australia: FOR WHOLESALE INVESTORS ONLY. Issued by Lazard Asset Management Pacific Co., ABN 13 064 523 619, AFS License 238432, Level 39 Gateway, 1 Macquarie Place, Sydney
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to conduct Type 1 (dealing in securities) and Type 4 (advising on securities) regulated activities. This document is only for “professional investors” as defined under the Hong Kong Securities
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048616. Company Registration Number 201135005W. This document is for “institutional investors” or “accredited investors” as defined under the Securities and Futures Act, Chapter 289 of
Singapore and may not be distributed to any other person. United Kingdom: FOR PROFESSIONAL INVESTORS ONLY. Issued by Lazard Asset Management Ltd., 50 Stratton Street, London
W1J 8LL. Registered in England Number 525667. Authorised and regulated by the Financial Conduct Authority (FCA). United States: Issued by Lazard Asset Management LLC, 30 Rockefeller
Plaza, New York, NY 10112.

Lazard Emerging Markets Debt

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