Standard Life Investments (SLI) is eyeing Venezuela as the ideal country to grow its business, according to SLI bond manager Richard House, who made Venezuela the biggest credit risk in £106.2m Standard Life investments emerging market debt fund.
The decision by SLI came after Bank of America Merrill Lynch’s recent report stated that the government may bring in new policies that could improve the efficiency of resource allocation in Venezuela.
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Additionally, Venezuelan debt makes up to 5.7% of the fund, as against the JP Morgan EMBI global diversified index of 3.4%.
Despite the tough socialist government policies in Venezuela in recent years, which led to more crimes and high inflation, House was quoted by The Financial Times as saying that the government is now beginning to put in place policies that could turn the economy around.
House said the introduction of a new foreign exchange system a few weeks ago implied a significant devaluation of Venezuela’s currency.
"This is good for fiscal accounts and also export revenues. It is positive for US-dollar denominated bonds, which have rallied significantly as a result," House added.
