T Rowe Price favours Indonesian bonds
TOKYO (Reuters) - T Rowe Price Group (TROW.O) sees potential in Indonesian sovereign debt due to improving fiscal conditions and a likely credit ratings upgrade, but is wary of Philippine bonds due to political tensions, a company fund manager said.
Indonesia is expected to have a lower budget deficit and the resource-rich country is expected to benefit from recovering commodity prices, Michael Conelius, a vice president at T Rowe Price International, told Reuters in an interview.
"Indonesia, I think, is frankly under-rated by the rating agencies," said Conelius, an emerging market debt portfolio manager at the U.S.-based fund manager.
T Rowe Price, which managed $268.8 billion (162.5 billion pounds) in assets as of the end of March, is launching its first global fixed-income absolute return strategy later this year, which will include investments in emerging markets.
Conelius said Indonesia was in reasonably good fiscal shape and said: "I think they'll have a lower budget deficit than even themselves are forecasting."
He said the country's credit rating could be upgraded by one or two notches in the future.
Moody's raised its outlook on Indonesia's "Ba3" sovereign rating to positive from stable earlier in the month, saying the country had strong growth prospects given its reliance on domestic demand and "effective" economic policies.
But Conelius said he was not in favour of Philippine bonds due to increasing political tensions.
The Philippines has embarked on a $150 million plan to automate balloting in presidential elections next year but politicians and analysts have doubts about the automated process, as many fear chaos due to potential machine breakdown and delays in results transmission.
"One country we don't like is the Philippines. We haven't liked it for a while," he said.
"I think it's expensive and now we are seeing a build-up of political noise, not crisis, but a political noise over the coming months."
(Reporting by Chikafumi Hodo; Editing by Chris Gallagher)
