1 00:00:06,080 --> 00:00:06,760 Speaker 1: Welcome to trains. 2 00:00:06,800 --> 00:00:08,840 Speaker 2: I'm Joe Webber and I'm Eric Delchernas. 3 00:00:11,039 --> 00:00:13,920 Speaker 1: Eric twenty twenty six is already off to an interesting start. 4 00:00:14,320 --> 00:00:17,760 Speaker 1: I was on vacation for the holidays, lost track of time, 5 00:00:17,880 --> 00:00:19,279 Speaker 1: didn't know what day of the week it was, and 6 00:00:19,320 --> 00:00:21,119 Speaker 1: then I woke up to the Venezuela news and was like, 7 00:00:21,120 --> 00:00:23,439 Speaker 1: I guess I have to work on Saturday now. It 8 00:00:23,560 --> 00:00:24,640 Speaker 1: was eventful. 9 00:00:25,079 --> 00:00:27,120 Speaker 2: Yeah, absolutely, I think most people were shocked by it. 10 00:00:27,880 --> 00:00:30,040 Speaker 2: But yeah, the news flow is ridiculous. It's like a 11 00:00:30,160 --> 00:00:33,280 Speaker 2: year of news in a week every week. But in fact, 12 00:00:33,280 --> 00:00:36,040 Speaker 2: the Venezuela thing already seems a little distant pass but 13 00:00:36,159 --> 00:00:40,120 Speaker 2: it is a major deal. And we were struggling to 14 00:00:40,159 --> 00:00:42,920 Speaker 2: get somebody on ETFIQ, the TV show I do we 15 00:00:42,960 --> 00:00:45,160 Speaker 2: want to talk about this? So I did a f search, 16 00:00:45,200 --> 00:00:48,200 Speaker 2: which is the search through ETFs, and I said, okay, 17 00:00:48,600 --> 00:00:51,800 Speaker 2: terminal on the terminal which ETFs hold at least one 18 00:00:51,840 --> 00:00:55,560 Speaker 2: percent of Venezuela, and only four results, and they're all 19 00:00:55,600 --> 00:00:58,080 Speaker 2: bond funds. And the only one that had the one 20 00:00:58,120 --> 00:01:01,800 Speaker 2: that had the highest and was act was vemmy right, 21 00:01:01,920 --> 00:01:06,120 Speaker 2: and that's the het v emy and this is an 22 00:01:06,160 --> 00:01:08,800 Speaker 2: active manager. I hadn't heard of them. I know Vertics 23 00:01:08,800 --> 00:01:10,360 Speaker 2: it was a white label, but Stone Harbor was the 24 00:01:10,400 --> 00:01:13,040 Speaker 2: name of the manager. I basically reached out to my 25 00:01:13,080 --> 00:01:14,440 Speaker 2: buddy seth Over at Vertice. 26 00:01:14,720 --> 00:01:16,319 Speaker 1: He hooked us up with. 27 00:01:16,560 --> 00:01:19,319 Speaker 2: Jim who is on the show today, and we had 28 00:01:19,319 --> 00:01:23,160 Speaker 2: a great discussion. He came in at last minute and 29 00:01:23,240 --> 00:01:26,360 Speaker 2: talked about the bonds and why he owned them, and 30 00:01:26,400 --> 00:01:28,520 Speaker 2: he bought them a year ago, so he saw something 31 00:01:28,600 --> 00:01:31,840 Speaker 2: pretty early, and I think that's interesting. Then I looked 32 00:01:31,840 --> 00:01:33,880 Speaker 2: through the portfolio and it's doing really well, and there's 33 00:01:33,920 --> 00:01:36,840 Speaker 2: some of these really interesting countries that are like really 34 00:01:37,000 --> 00:01:39,880 Speaker 2: killing it, like Latin America countries, but also outside of that. 35 00:01:40,240 --> 00:01:42,240 Speaker 2: So I thought we should really get into this like 36 00:01:42,360 --> 00:01:47,080 Speaker 2: em debt situation because we could see other situations right 37 00:01:47,120 --> 00:01:50,280 Speaker 2: where some really left for dead bonds get restructured and like, 38 00:01:50,440 --> 00:01:51,760 Speaker 2: how can you benefit from that? 39 00:01:52,120 --> 00:01:54,840 Speaker 1: Can't wait to continue the conversation. The Jim that you mentioned, 40 00:01:55,160 --> 00:01:59,680 Speaker 1: Jim Craig, who is the CIO and head of Emerging 41 00:01:59,680 --> 00:02:03,720 Speaker 1: Market and co founder at Stone Harbor. The ETF that 42 00:02:03,720 --> 00:02:06,920 Speaker 1: we're going to be talking about Vitus Stone Harbor Emerging 43 00:02:06,960 --> 00:02:09,959 Speaker 1: Market's high Yield bond ETF. Again, that ticket v E. 44 00:02:10,160 --> 00:02:10,480 Speaker 3: M Y. 45 00:02:11,120 --> 00:02:15,959 Speaker 1: Also joining us Damien sas hour fixed income analyst with 46 00:02:16,000 --> 00:02:21,360 Speaker 1: Bloomberg Intelligence, this time on trillions around the world with 47 00:02:21,440 --> 00:02:27,239 Speaker 1: emerging market's debt. Jim Damian, Welcome to Trillians. 48 00:02:27,600 --> 00:02:28,840 Speaker 4: Thank you, thanks for having me. 49 00:02:29,160 --> 00:02:32,639 Speaker 1: Okay, Jim, what did it feel like when you woke up? 50 00:02:32,960 --> 00:02:35,560 Speaker 1: I was on vacation, woke up on that Saturday to 51 00:02:36,480 --> 00:02:41,200 Speaker 1: you know, the US basically going into Venezuela and extracting 52 00:02:42,880 --> 00:02:47,440 Speaker 1: its president Maduro as well as his wife. What did 53 00:02:47,440 --> 00:02:49,639 Speaker 1: it feel like to wake up that morning? For you? 54 00:02:50,360 --> 00:02:53,520 Speaker 4: It felt pretty good. We were anticipating something would be 55 00:02:53,560 --> 00:02:56,320 Speaker 4: happening in short order. You did never know the timing, 56 00:02:56,360 --> 00:02:58,440 Speaker 4: didn't know exactly what was going to happen, but that 57 00:02:58,560 --> 00:03:02,680 Speaker 4: was certainly a pleasant surprise. We've been witnessing the kind 58 00:03:02,680 --> 00:03:04,800 Speaker 4: of collapse of Venezuela for a long time, so this 59 00:03:04,880 --> 00:03:06,399 Speaker 4: is a positive change in our view. 60 00:03:06,639 --> 00:03:09,800 Speaker 1: When were you able to actually get exposure to the 61 00:03:09,840 --> 00:03:13,720 Speaker 1: country because you know there's sanctions, It's it's very difficult 62 00:03:13,720 --> 00:03:15,880 Speaker 1: to be thinking about this if you're an oil company. 63 00:03:16,040 --> 00:03:18,440 Speaker 1: The only one that has a meaningful presence there is Chevron. 64 00:03:18,480 --> 00:03:21,800 Speaker 1: They have a special waiver. So what makes emerging market 65 00:03:21,880 --> 00:03:22,520 Speaker 1: debt different. 66 00:03:22,880 --> 00:03:26,080 Speaker 4: So this is a country that defaulted and was restructured 67 00:03:26,120 --> 00:03:28,519 Speaker 4: in the early nineteen nineties. In fact, I was part 68 00:03:28,520 --> 00:03:30,400 Speaker 4: of that, part of that team. So the debt has 69 00:03:30,440 --> 00:03:33,640 Speaker 4: been been outstanding and trading for quite a while. More recently, 70 00:03:33,720 --> 00:03:36,080 Speaker 4: the sanctions were removed from trading the debt, and that 71 00:03:36,200 --> 00:03:38,800 Speaker 4: was several years ago, and we've been accumulating that debt 72 00:03:38,840 --> 00:03:39,320 Speaker 4: since then. 73 00:03:39,520 --> 00:03:40,560 Speaker 1: How do you go about doing that? 74 00:03:40,880 --> 00:03:43,119 Speaker 4: So trades pretty actively. So it's one of the more 75 00:03:43,160 --> 00:03:47,480 Speaker 4: actively traded entities in our in the emerging market's step market. 76 00:03:47,480 --> 00:03:49,920 Speaker 4: It trades over the counter. It's all denominated in dollars, 77 00:03:50,840 --> 00:03:53,760 Speaker 4: has coupons and maturities. Obviously they're in default, so you're 78 00:03:53,800 --> 00:03:56,119 Speaker 4: you're able to pick from a menu of options. 79 00:03:56,320 --> 00:03:58,360 Speaker 2: Okay, quick question on the bond. So you bought them 80 00:03:58,360 --> 00:04:00,600 Speaker 2: a year ago. I believe they're up like one hundred 81 00:04:00,600 --> 00:04:03,360 Speaker 2: and forty percent in a year now. They went up 82 00:04:03,360 --> 00:04:06,600 Speaker 2: like one hundred percent before the extraction, then they get 83 00:04:06,600 --> 00:04:11,240 Speaker 2: another boost after the extraction. Was the run up in 84 00:04:11,400 --> 00:04:14,560 Speaker 2: return because people thought an extraction was going to happen, 85 00:04:14,560 --> 00:04:16,520 Speaker 2: almost the way like animals can tell a tsunamis coming 86 00:04:16,520 --> 00:04:21,040 Speaker 2: before humans or would you have a restructuring, even if 87 00:04:21,040 --> 00:04:24,160 Speaker 2: there wasn't an extraction or was this was this whole 88 00:04:24,160 --> 00:04:27,440 Speaker 2: thing on bet on something happening with this guy. 89 00:04:28,040 --> 00:04:30,400 Speaker 4: It's really the claim value of what you're getting when 90 00:04:30,400 --> 00:04:34,200 Speaker 4: you buy default of debt. So whf you think about Venezuela, 91 00:04:34,279 --> 00:04:37,039 Speaker 4: they've been into faults in twenty seventeen, So your claim 92 00:04:37,080 --> 00:04:39,719 Speaker 4: value was par one hundred cents on the dollar plus 93 00:04:39,720 --> 00:04:42,919 Speaker 4: past due entrants interest, which is about one hundred another 94 00:04:43,080 --> 00:04:44,760 Speaker 4: fifty cents or so, So I'd say one hundred and 95 00:04:44,800 --> 00:04:48,680 Speaker 4: fifty to two hundred points in claim value, and the 96 00:04:48,760 --> 00:04:51,360 Speaker 4: dollar price was somewhere around twenty, So you're buying something 97 00:04:51,360 --> 00:04:53,520 Speaker 4: at twenty. The claim value is very high. That the 98 00:04:54,160 --> 00:04:56,600 Speaker 4: what is difficult part is figuring out the timing of it. 99 00:04:56,960 --> 00:04:59,760 Speaker 4: So last year, the timing was getting closer to whatever 100 00:04:59,800 --> 00:05:02,400 Speaker 4: the whatever that means. We didn't know there was going 101 00:05:02,440 --> 00:05:05,080 Speaker 4: to be an extraction of Maduro, but there's going to 102 00:05:05,120 --> 00:05:07,120 Speaker 4: be some sort of change, and that was closer, and 103 00:05:07,160 --> 00:05:10,159 Speaker 4: as that closeness becomes more of a reality, the bond 104 00:05:10,240 --> 00:05:10,960 Speaker 4: prices went up. 105 00:05:11,920 --> 00:05:14,640 Speaker 1: How do you go about figuring out what percentage of 106 00:05:14,680 --> 00:05:17,480 Speaker 1: the portfolio you should expose to something that could be 107 00:05:18,520 --> 00:05:20,320 Speaker 1: you know, kind of a gamble. 108 00:05:21,480 --> 00:05:24,599 Speaker 4: We do a lot of probability analysis and everything that 109 00:05:24,680 --> 00:05:27,279 Speaker 4: we do, so we put probabilities around, what's the upside, 110 00:05:27,279 --> 00:05:29,920 Speaker 4: what's the potential downside, and we weigh it based off 111 00:05:29,960 --> 00:05:32,080 Speaker 4: of that, and we literally we do this every month 112 00:05:32,120 --> 00:05:36,000 Speaker 4: for everything in our portfolios. The probability that Venezuela was 113 00:05:36,040 --> 00:05:38,880 Speaker 4: going to have a regime change of some sort had increased, 114 00:05:39,080 --> 00:05:42,520 Speaker 4: so that increased our weighting in Venezuela, and that's something 115 00:05:42,560 --> 00:05:44,640 Speaker 4: that we feel very strongly about. I mean, you have 116 00:05:44,680 --> 00:05:46,479 Speaker 4: to factor in the downside as well, and we're not 117 00:05:46,520 --> 00:05:48,960 Speaker 4: out of the woods yet, but that downside I think 118 00:05:49,040 --> 00:05:54,440 Speaker 4: is lower now than before, so that warrants a larger weight. 119 00:05:55,000 --> 00:05:57,920 Speaker 1: Okay, so the name of the ETF has emerging markets 120 00:05:57,920 --> 00:06:00,880 Speaker 1: in it. Is Venezuela actually in our market or is 121 00:06:00,920 --> 00:06:02,760 Speaker 1: it more like a frontier market. 122 00:06:03,760 --> 00:06:06,440 Speaker 4: It's more of a frontier market right now, but it 123 00:06:06,560 --> 00:06:09,760 Speaker 4: used to be just an emerging market. So it's hopefully 124 00:06:09,800 --> 00:06:12,359 Speaker 4: coming back and adjusting the emerging market category. 125 00:06:12,440 --> 00:06:15,440 Speaker 1: And I mean there's so that that line is obviously 126 00:06:15,680 --> 00:06:19,200 Speaker 1: like where there are countries that are uninvestable almost and 127 00:06:19,640 --> 00:06:23,760 Speaker 1: obviously Venezuela's entered into the realm of being investable. But 128 00:06:24,120 --> 00:06:26,400 Speaker 1: do you how do you think about the risk reward 129 00:06:26,440 --> 00:06:29,159 Speaker 1: for these profiles, because a lot of the countries that 130 00:06:29,200 --> 00:06:32,200 Speaker 1: are in the in the portfolio, Lebanon being another one, 131 00:06:32,480 --> 00:06:35,359 Speaker 1: like these are countries that are you know, the reward 132 00:06:35,400 --> 00:06:37,800 Speaker 1: could be ten years off really, so how do you 133 00:06:37,839 --> 00:06:40,960 Speaker 1: go about figuring out what's real and what is just 134 00:06:41,040 --> 00:06:41,599 Speaker 1: too risky. 135 00:06:41,880 --> 00:06:44,440 Speaker 4: That's a great point because the reward could be ten 136 00:06:44,520 --> 00:06:46,320 Speaker 4: years off, for five years off, for two years off, 137 00:06:46,320 --> 00:06:49,040 Speaker 4: and that time value of money is very very significant. 138 00:06:49,360 --> 00:06:51,960 Speaker 4: About half of the emerging markets that morning and that 139 00:06:52,120 --> 00:06:55,240 Speaker 4: genius and a rockstar, but about half of the market 140 00:06:55,240 --> 00:06:57,880 Speaker 4: itself is actually investment grade, so a lots change over 141 00:06:57,960 --> 00:07:00,520 Speaker 4: the past thirty four years I've been doing this. And 142 00:07:00,600 --> 00:07:02,880 Speaker 4: the other half is non investment grade. And within that 143 00:07:02,920 --> 00:07:07,160 Speaker 4: there are different tiers of non investment gradeness. Put it 144 00:07:07,160 --> 00:07:10,240 Speaker 4: that way. In Venezuela Lebanon are at the lower end 145 00:07:10,240 --> 00:07:12,720 Speaker 4: of that, and those are the ones where those can 146 00:07:12,760 --> 00:07:14,600 Speaker 4: be kind of your deal drivers if you think about 147 00:07:14,600 --> 00:07:16,320 Speaker 4: it from a financial terms, those are the ones that 148 00:07:16,440 --> 00:07:19,000 Speaker 4: could have if you have a good information as you could, 149 00:07:19,120 --> 00:07:20,160 Speaker 4: you could do really. 150 00:07:19,920 --> 00:07:23,440 Speaker 1: Well in what can't you invest in right now? 151 00:07:23,600 --> 00:07:27,240 Speaker 4: Things like Cuba, although Syria may come on board at 152 00:07:27,240 --> 00:07:29,640 Speaker 4: some point. There's North Korea. These are countries which you 153 00:07:29,680 --> 00:07:31,360 Speaker 4: that you really can't you can't invest into the. 154 00:07:31,360 --> 00:07:33,200 Speaker 1: Ones when you use your compliance training at your job, 155 00:07:33,280 --> 00:07:35,800 Speaker 1: it's like, yeah, do not do anything that involves these. 156 00:07:35,800 --> 00:07:38,400 Speaker 4: Exactly Russia is in that right now. So these are 157 00:07:38,480 --> 00:07:41,400 Speaker 4: these are countries where you just you you, you get 158 00:07:41,440 --> 00:07:43,040 Speaker 4: put in the bag into the bad house if you 159 00:07:43,240 --> 00:07:45,200 Speaker 4: if you invest in those for obvious reasons. 160 00:07:45,520 --> 00:07:47,240 Speaker 1: But do you have to keep up on them because 161 00:07:47,240 --> 00:07:50,000 Speaker 1: at some point, like maybe Russia comes back online and 162 00:07:50,160 --> 00:07:53,280 Speaker 1: that becomes an opportunity. Right, you can't be completely in 163 00:07:53,320 --> 00:07:54,080 Speaker 1: the dark about them. 164 00:07:54,160 --> 00:07:56,720 Speaker 4: One percent. We have an entire team just going through 165 00:07:56,760 --> 00:08:00,240 Speaker 4: the oh fact Office of Foreign Asset Control website, see 166 00:08:00,280 --> 00:08:03,440 Speaker 4: what new new updates there are as a country been 167 00:08:03,480 --> 00:08:06,840 Speaker 4: put on or taken off. That's very important and obviously 168 00:08:06,880 --> 00:08:08,840 Speaker 4: you well maybe it's not obvious, but to me, you 169 00:08:08,920 --> 00:08:11,000 Speaker 4: want to be ahead of that. So so country comes 170 00:08:11,040 --> 00:08:12,840 Speaker 4: off of that sanctions list. 171 00:08:13,680 --> 00:08:17,160 Speaker 1: As Venezuela sounds like it did, it did were there exactly? 172 00:08:17,640 --> 00:08:20,400 Speaker 4: The Venezuelan bonds at one point traded at two so 173 00:08:20,440 --> 00:08:23,000 Speaker 4: now they're trading at thirty five, So you want to 174 00:08:23,040 --> 00:08:24,920 Speaker 4: be you want to kind of front run that flow 175 00:08:24,960 --> 00:08:26,160 Speaker 4: if you can't be there when it's two. 176 00:08:26,320 --> 00:08:30,520 Speaker 2: Right, Uh, let me bring Namien in because this he's 177 00:08:30,640 --> 00:08:33,360 Speaker 2: a mile deep in this stuff. I always hear him 178 00:08:33,360 --> 00:08:37,199 Speaker 2: over here, him talking about this. You're you're writing about 179 00:08:37,200 --> 00:08:41,360 Speaker 2: this all the time. Were you into Venezuela a year ago? 180 00:08:41,679 --> 00:08:43,600 Speaker 2: How have that has Let's just start with that country 181 00:08:43,600 --> 00:08:48,680 Speaker 2: for you. How's your research been on Venezuela before and 182 00:08:48,760 --> 00:08:49,640 Speaker 2: after the extraction? 183 00:08:49,880 --> 00:08:51,480 Speaker 3: Well, I think we have to look back at the 184 00:08:51,520 --> 00:08:53,880 Speaker 3: fact that these bonds were sanctioned. They weren't you weren't 185 00:08:53,880 --> 00:08:57,079 Speaker 3: allowed to own them, right until President be former President 186 00:08:57,120 --> 00:09:01,240 Speaker 3: Biden basically removed the sanctions on trading in the secondary market, 187 00:09:01,280 --> 00:09:04,160 Speaker 3: which opened the door for Jim and for others to 188 00:09:04,240 --> 00:09:07,280 Speaker 3: start buying up these bonds again. Right, So that's relatively recent. 189 00:09:07,280 --> 00:09:08,880 Speaker 3: And if you look at like the return, I mean, 190 00:09:09,160 --> 00:09:10,559 Speaker 3: you're absolutely right. I mean, if you look at the 191 00:09:10,640 --> 00:09:14,520 Speaker 3: JP Morgan NB Venezuela bond index rose one hundred percent 192 00:09:14,600 --> 00:09:18,120 Speaker 3: last year. But it's not alone Lebanon, Ukraine, I mean, 193 00:09:18,200 --> 00:09:21,200 Speaker 3: Sri Lanka, Gana, all of these sort of Zambia, these 194 00:09:21,200 --> 00:09:25,839 Speaker 3: distressed em dollar bond issues. Issuers have had tremendous years 195 00:09:25,840 --> 00:09:28,360 Speaker 3: in twenty twenty five, so you have to kind of 196 00:09:28,840 --> 00:09:31,960 Speaker 3: parse out how much of the move is due to people, 197 00:09:32,280 --> 00:09:35,280 Speaker 3: you know, expecting regime change in Venezuela and how much 198 00:09:35,400 --> 00:09:37,440 Speaker 3: was just the beta trade that we saw on em 199 00:09:37,520 --> 00:09:39,800 Speaker 3: high yield over the better part of last year. My goodness, 200 00:09:39,840 --> 00:09:40,600 Speaker 3: it's been a good run. 201 00:09:41,760 --> 00:09:45,439 Speaker 1: But what's underlying that that beta trade? Like why there 202 00:09:45,640 --> 00:09:48,280 Speaker 1: why the enthusiasm for countries that we haven't really been 203 00:09:48,320 --> 00:09:49,120 Speaker 1: hearing that much about. 204 00:09:49,240 --> 00:09:52,720 Speaker 3: I would say the risk sentiment, suppression of volatility, the vics, 205 00:09:52,760 --> 00:09:54,280 Speaker 3: all the things that we look at, right, I mean 206 00:09:54,400 --> 00:09:58,480 Speaker 3: vall is that cyclical lows across equities, bonds and effects, right, 207 00:09:58,559 --> 00:10:01,640 Speaker 3: So I mean that's a perfect the environment for investors 208 00:10:01,679 --> 00:10:05,120 Speaker 3: to go and you know extract carry right, and look, 209 00:10:05,240 --> 00:10:07,240 Speaker 3: Venezuela doesn't pay off, right, I mean, these are the 210 00:10:07,280 --> 00:10:09,880 Speaker 3: faulted bonds. There's no coupon income there. But you know, 211 00:10:10,160 --> 00:10:12,040 Speaker 3: the point is to take a little bit of a 212 00:10:12,080 --> 00:10:16,640 Speaker 3: punt on, you know, a very binary outcome makes a 213 00:10:16,679 --> 00:10:18,440 Speaker 3: lot of sense when the bonds are treading at you know, 214 00:10:18,520 --> 00:10:21,120 Speaker 3: five cents on the dollar, right, and the rest of 215 00:10:21,120 --> 00:10:25,079 Speaker 3: the universe in em distressed is up in double digits plus. So, 216 00:10:25,080 --> 00:10:27,080 Speaker 3: so you know, kudos to Jim and the team at 217 00:10:27,120 --> 00:10:30,199 Speaker 3: Stone Harbor for identifying that, and you know, identifying the 218 00:10:30,200 --> 00:10:32,040 Speaker 3: fact that the bonds are no longer sanctioned and that 219 00:10:32,080 --> 00:10:35,760 Speaker 3: they do they do demand the place in investor portfolios, 220 00:10:35,800 --> 00:10:39,440 Speaker 3: albeit probably a very small waiting, you know, relative to 221 00:10:39,679 --> 00:10:40,680 Speaker 3: other more developed markets. 222 00:10:40,679 --> 00:10:43,959 Speaker 1: Well that's a really good point, Jim, like the you 223 00:10:44,000 --> 00:10:47,240 Speaker 1: wouldn't be able to get this exposure through any other 224 00:10:47,679 --> 00:10:50,640 Speaker 1: ETF right, Like, so, how do you talk to institutional 225 00:10:50,640 --> 00:10:55,440 Speaker 1: investors about how to put this into a portfolio when 226 00:10:55,920 --> 00:10:58,040 Speaker 1: you know what you're offering here is not something that 227 00:10:58,080 --> 00:11:00,680 Speaker 1: anybody else is going to get through, like you know, bond. 228 00:11:01,080 --> 00:11:03,199 Speaker 4: Well, it's interesting because most of our most of our 229 00:11:03,200 --> 00:11:06,800 Speaker 4: client bases is actually in institutional investors and they want 230 00:11:06,840 --> 00:11:10,520 Speaker 4: that exposure. So they they view the market very differently 231 00:11:10,520 --> 00:11:11,920 Speaker 4: than a lot of others. They view this as a 232 00:11:12,040 --> 00:11:14,280 Speaker 4: this is a market that that has historically outperformed by 233 00:11:14,280 --> 00:11:16,760 Speaker 4: the fixed income comes with higher volatility. They appreciate that, 234 00:11:16,760 --> 00:11:19,240 Speaker 4: they understand it, but that volatility can be a friend 235 00:11:19,240 --> 00:11:21,880 Speaker 4: as well, So they want that exposure. And something like 236 00:11:21,880 --> 00:11:25,200 Speaker 4: a venezuela is something they understand from a from a 237 00:11:25,280 --> 00:11:28,200 Speaker 4: risk and reward standpoint, and they want to be exposed 238 00:11:28,200 --> 00:11:29,640 Speaker 4: to that. But to your point, I'm on the ETFs, 239 00:11:29,679 --> 00:11:31,960 Speaker 4: aren't that many ETFs that that actually own it? 240 00:11:42,240 --> 00:11:45,160 Speaker 2: This is where I think ETFs are perfect because this 241 00:11:45,240 --> 00:11:48,679 Speaker 2: makes something very complicated and almost impossible for most people 242 00:11:48,760 --> 00:11:50,640 Speaker 2: very easy. You just, you know, roll out of bed 243 00:11:50,679 --> 00:11:52,440 Speaker 2: and you click buy and you own all these cool 244 00:11:52,480 --> 00:11:56,920 Speaker 2: bonds right from these uh frontier countries, the diversification. 245 00:11:56,720 --> 00:11:59,280 Speaker 1: Market countries, some of which happen to. 246 00:11:59,240 --> 00:12:05,640 Speaker 2: Be em well, I'm looking at the portfolio. I mean, honestly, Kazakhstan, Ethiopia. 247 00:12:06,160 --> 00:12:08,680 Speaker 3: Yeah, stand's a pretty good credit. I mean you got 248 00:12:08,679 --> 00:12:10,320 Speaker 3: to take a step back here, I mean, because now 249 00:12:10,320 --> 00:12:12,280 Speaker 3: you get it into the long reads with me. You know, 250 00:12:12,360 --> 00:12:14,960 Speaker 3: like you know, Venezuela is a very unique situation, right, 251 00:12:15,040 --> 00:12:17,679 Speaker 3: I mean you call it frontier. I mean it used 252 00:12:17,720 --> 00:12:19,520 Speaker 3: to be one of the most developed of emerging markets 253 00:12:19,559 --> 00:12:22,040 Speaker 3: going back to the seventies and eighties, and everyti things happened. 254 00:12:22,240 --> 00:12:24,839 Speaker 1: Well, you know, ours figured prominently in a James bond. 255 00:12:25,520 --> 00:12:26,600 Speaker 1: I learned through all. 256 00:12:26,600 --> 00:12:27,720 Speaker 4: This, ye Caanakas. 257 00:12:28,280 --> 00:12:30,160 Speaker 3: But but look, I mean I think you have to 258 00:12:30,240 --> 00:12:32,880 Speaker 3: kind of take a step back and say, okay, you 259 00:12:32,920 --> 00:12:35,280 Speaker 3: know it's not just ETFs guys, and I know this 260 00:12:35,360 --> 00:12:38,320 Speaker 3: is you know, this is trillions here, but active fund managers. 261 00:12:38,320 --> 00:12:40,079 Speaker 3: You know, I'm hard pressed. I did a whole research 262 00:12:40,120 --> 00:12:42,920 Speaker 3: report last year. Last week, I was looking for anybody 263 00:12:42,920 --> 00:12:45,199 Speaker 3: who had Benny on their books, and outside of a 264 00:12:45,240 --> 00:12:47,920 Speaker 3: few funds run by Ashmore won by GMO, very few 265 00:12:47,960 --> 00:12:52,240 Speaker 3: funds have greater than three percent of their portfolio in Venezuela. 266 00:12:52,280 --> 00:12:55,400 Speaker 3: And that's after last year's one hundred percent plus game. 267 00:12:55,880 --> 00:12:58,480 Speaker 3: So you know, it seems like investors have been very 268 00:12:58,679 --> 00:13:01,400 Speaker 3: very I don't us a conservative, but they've been very 269 00:13:01,440 --> 00:13:03,920 Speaker 3: They've been managing that concentration risk really really well. Because 270 00:13:03,920 --> 00:13:06,280 Speaker 3: we're not just talking about many sovereign bonds. We're talking 271 00:13:06,280 --> 00:13:08,560 Speaker 3: about Petavesa, the state on oil company. Again, these are 272 00:13:08,600 --> 00:13:11,680 Speaker 3: all dollar denominated bonds, but those are the two big issuers. 273 00:13:11,679 --> 00:13:15,960 Speaker 3: There's other little LACR, the utility, there's some other you know, 274 00:13:16,040 --> 00:13:19,760 Speaker 3: sort of any linked debt out there, but you know, 275 00:13:19,760 --> 00:13:22,120 Speaker 3: buying and large. What we're talking about is Petavesa and 276 00:13:22,120 --> 00:13:26,080 Speaker 3: thezel Venezuela sovereign and those bonds sixty call it seventy 277 00:13:26,160 --> 00:13:29,120 Speaker 3: billion dollars outstanding. Just how much of that can you 278 00:13:29,160 --> 00:13:31,679 Speaker 3: own in a portfolio to give you, I don't know, 279 00:13:31,760 --> 00:13:34,120 Speaker 3: double digit exposure. I mean it's it's going to be 280 00:13:34,160 --> 00:13:34,679 Speaker 3: a challenge. 281 00:13:34,800 --> 00:13:38,280 Speaker 2: Yeah, well let me bring real quick here. We don't separate. 282 00:13:38,360 --> 00:13:41,840 Speaker 2: There's em debt, there's investment grade, which would be the 283 00:13:41,840 --> 00:13:45,920 Speaker 2: big tickers EMB. Then there's high yield, which is the 284 00:13:45,920 --> 00:13:48,319 Speaker 2: big tickers emhy. Those are the two big I shares 285 00:13:48,360 --> 00:13:51,640 Speaker 2: products your high yield. So you're basically trying to be 286 00:13:51,800 --> 00:13:54,960 Speaker 2: e e mhy. Now let me go back to Damien 287 00:13:55,000 --> 00:13:57,400 Speaker 2: on this. Like let's say you're you know, I don't know, 288 00:13:57,440 --> 00:14:00,800 Speaker 2: your college roommate texts you and says, hey, I saw 289 00:14:00,840 --> 00:14:03,560 Speaker 2: this venezuela. This happens to me sometimes and it's like 290 00:14:04,000 --> 00:14:05,440 Speaker 2: I kind of want to get in on this stuff. 291 00:14:06,559 --> 00:14:09,320 Speaker 2: Like do you tell them, hey, look, uh, maybe don't 292 00:14:09,320 --> 00:14:11,560 Speaker 2: do high yield? Do more of the investment grade or 293 00:14:12,000 --> 00:14:14,600 Speaker 2: like is or should you have both? Like what's the 294 00:14:14,800 --> 00:14:18,040 Speaker 2: normal person's play here in terms of like adding this 295 00:14:18,080 --> 00:14:21,000 Speaker 2: to a portfolio and the difference between going high yield 296 00:14:21,080 --> 00:14:22,000 Speaker 2: or investment grade. 297 00:14:22,680 --> 00:14:25,280 Speaker 3: So I guess for me, Look, you know, I mean 298 00:14:25,320 --> 00:14:28,440 Speaker 3: most people link emerging market debt forget about investment grade 299 00:14:28,480 --> 00:14:30,560 Speaker 3: or highyield with an EM they assume it's HIG yield. 300 00:14:30,680 --> 00:14:32,600 Speaker 1: Yeah, I mean that's the historical assumption. 301 00:14:32,680 --> 00:14:34,720 Speaker 3: Yeah, you know, we were always the guys we em 302 00:14:34,800 --> 00:14:36,880 Speaker 3: you know, portfolio managers and traders. We were always the 303 00:14:36,880 --> 00:14:39,080 Speaker 3: guys they plunk us at the end of the row, 304 00:14:39,560 --> 00:14:41,320 Speaker 3: right next to the US HIG yield guys. We were 305 00:14:41,360 --> 00:14:44,640 Speaker 3: like the you know, the stepchild, right, the one nobody wanted. 306 00:14:44,800 --> 00:14:46,760 Speaker 3: And you know, obviously as the acid classes developed over 307 00:14:46,760 --> 00:14:48,480 Speaker 3: the better part of the last twenty five thirty years, 308 00:14:48,640 --> 00:14:50,880 Speaker 3: you know, things have changed. But you know, far be 309 00:14:51,000 --> 00:14:53,120 Speaker 3: it from me to judge, you know, what makes you know, 310 00:14:53,480 --> 00:14:56,040 Speaker 3: investors kind of you know, look at emerging markets. In 311 00:14:56,040 --> 00:14:58,400 Speaker 3: my opinion, it's going to be about carry. It's going 312 00:14:58,480 --> 00:15:00,720 Speaker 3: to be about you know, higher coop. It's going to 313 00:15:00,760 --> 00:15:03,320 Speaker 3: be about you know, and you're paid for that risk, right. 314 00:15:03,240 --> 00:15:05,120 Speaker 2: All real quick. Just for anyone who just was like, 315 00:15:05,160 --> 00:15:08,240 Speaker 2: what does that mean? What is just describe carry. 316 00:15:08,400 --> 00:15:10,640 Speaker 3: A return over and above US treasuries. In my mind, 317 00:15:10,680 --> 00:15:12,800 Speaker 3: if you're talking about US dollar debt, if you're talking 318 00:15:12,840 --> 00:15:16,720 Speaker 3: about dollar denominated paper, you're benchmarked to the US Treasury curve. Right, 319 00:15:16,840 --> 00:15:20,880 Speaker 3: So how much excess return excess yield are you getting 320 00:15:21,200 --> 00:15:24,240 Speaker 3: by investing in an emerging market dollar debt all else 321 00:15:24,280 --> 00:15:28,160 Speaker 3: equal maturity duration, equal relative to US treasuries and you 322 00:15:28,240 --> 00:15:31,400 Speaker 3: get considerable. I mean, there's very few asset classes US 323 00:15:31,160 --> 00:15:34,440 Speaker 3: dollar denominated fixed in COMACI classes that can give you 324 00:15:34,480 --> 00:15:38,480 Speaker 3: that additional that that additional, that incremental carry, that incremental coupon. 325 00:15:38,600 --> 00:15:41,080 Speaker 2: Yeah, so, Joel, I'll give you the numbers. The GOVT, 326 00:15:41,280 --> 00:15:44,000 Speaker 2: which is the I shares government bond ETF to covers 327 00:15:44,040 --> 00:15:46,800 Speaker 2: the whole curve is up seven percent in the past 328 00:15:46,840 --> 00:15:50,920 Speaker 2: two years. VEMMI is up thirty one percent, EMHY up 329 00:15:50,960 --> 00:15:53,280 Speaker 2: twenty seven percent, and emb up twenty one percent. So 330 00:15:53,800 --> 00:15:56,200 Speaker 2: that's the carry, right, you got So it has worked 331 00:15:56,240 --> 00:15:58,360 Speaker 2: out for sure, and high yields done even a little better. 332 00:15:59,320 --> 00:16:01,840 Speaker 3: Yeah, fair to say, yeah, absolutely. And look, you know 333 00:16:01,880 --> 00:16:04,360 Speaker 3: again what we're kind of when you look at you know, 334 00:16:04,480 --> 00:16:08,720 Speaker 3: emerging market debt, most people it's mostly sovereign quasi sovereign issuers, 335 00:16:08,720 --> 00:16:11,960 Speaker 3: you know, but in this instance, you know, there's there's 336 00:16:12,000 --> 00:16:14,840 Speaker 3: you know, we're talking about both, right, We're talking about peteveesa, 337 00:16:14,840 --> 00:16:16,720 Speaker 3: which is a you know, state on oil company i 338 00:16:16,760 --> 00:16:20,080 Speaker 3: EA quasi sovereign issuer and you're talking about Venezuela the sovereign, right, 339 00:16:20,080 --> 00:16:23,400 Speaker 3: So when you look at EMB, it's all sovereign, it's 340 00:16:23,440 --> 00:16:26,400 Speaker 3: all quasi sovereign, but they avoid all EM corporate stuff. Right. 341 00:16:26,520 --> 00:16:28,800 Speaker 3: So if you want to kind of expand the universe 342 00:16:28,800 --> 00:16:31,440 Speaker 3: into EM corporates and start looking at the Pemmexes and 343 00:16:31,480 --> 00:16:33,640 Speaker 3: the Petrobrass, well, PEMS is a quasi but you know 344 00:16:33,960 --> 00:16:37,720 Speaker 3: valet is another one. You know, carry I mean incremental coupon, 345 00:16:37,840 --> 00:16:40,000 Speaker 3: you know, return potential goes up that much more. So 346 00:16:40,160 --> 00:16:43,000 Speaker 3: it's really about how you carve up the universe. And 347 00:16:43,080 --> 00:16:45,600 Speaker 3: you know, from from I guess you know, Jim's perspective 348 00:16:45,920 --> 00:16:48,680 Speaker 3: did a pretty good job of identifying what was really 349 00:16:48,720 --> 00:16:52,640 Speaker 3: one of those last few vestiges of you know, incremental 350 00:16:52,720 --> 00:16:55,280 Speaker 3: upside and EM because I mean, as far as the 351 00:16:55,320 --> 00:16:58,320 Speaker 3: I could see, there were very few with the potential 352 00:16:58,320 --> 00:17:00,800 Speaker 3: to do a triple digit return year over your return 353 00:17:00,880 --> 00:17:01,440 Speaker 3: like Beny did. 354 00:17:01,920 --> 00:17:03,640 Speaker 4: It's been a it has been a it's been a 355 00:17:03,640 --> 00:17:05,680 Speaker 4: good year. There's been a not a lot of those 356 00:17:05,720 --> 00:17:07,639 Speaker 4: opportunities out there. There's still a few out there that 357 00:17:07,720 --> 00:17:10,239 Speaker 4: are right now. But no, to your point, you have 358 00:17:10,280 --> 00:17:12,439 Speaker 4: to you have to identify them. That's the benefit of 359 00:17:12,960 --> 00:17:14,879 Speaker 4: you know, tooting our own hon here from an active 360 00:17:14,880 --> 00:17:17,400 Speaker 4: management standpoint. But I think it's important to note an 361 00:17:17,440 --> 00:17:20,920 Speaker 4: actively managed GTF in this format I think really does 362 00:17:22,160 --> 00:17:25,120 Speaker 4: work well in the strategy because you can't overweight those opportunities. 363 00:17:25,280 --> 00:17:25,520 Speaker 3: Yeah. 364 00:17:25,760 --> 00:17:30,080 Speaker 1: Actually, on the question of sovereign versus corporate, and you 365 00:17:30,160 --> 00:17:33,000 Speaker 1: brought up Petavesa there, like, Jim, what exposure. 366 00:17:32,600 --> 00:17:32,800 Speaker 2: Do you have? 367 00:17:32,920 --> 00:17:35,840 Speaker 1: Is it all sovereign or and is there any desire 368 00:17:35,880 --> 00:17:37,520 Speaker 1: to try and go get the Pedavesa debt. 369 00:17:37,920 --> 00:17:40,440 Speaker 4: No, we definitely own Petasa debt. In fact, that's we're 370 00:17:40,440 --> 00:17:43,280 Speaker 4: more overweight in the product and in the exactly. So 371 00:17:43,359 --> 00:17:46,920 Speaker 4: overall we're about fifty five percent sovereign forty five corporate. 372 00:17:47,000 --> 00:17:49,880 Speaker 4: So we do yea by design by design, so it's 373 00:17:49,880 --> 00:17:52,320 Speaker 4: fit roughly fifty to fifty by design, but we're overweight 374 00:17:52,359 --> 00:17:55,679 Speaker 4: sovereigns right now. But to your point, the corporate market 375 00:17:55,960 --> 00:17:59,320 Speaker 4: is has grown substantially in size and volume, and it's 376 00:17:59,359 --> 00:18:02,359 Speaker 4: very liquid and these or name brand you know, companies 377 00:18:02,400 --> 00:18:06,159 Speaker 4: that are world renowned and they do quite well, and 378 00:18:06,200 --> 00:18:08,840 Speaker 4: they actually offer a lot of extra yields, So why 379 00:18:08,880 --> 00:18:09,600 Speaker 4: not take it well. 380 00:18:09,560 --> 00:18:11,240 Speaker 3: Jim, can I ask you how much of your position 381 00:18:11,320 --> 00:18:14,320 Speaker 3: is in those eight and a half percent Venezuela. I'm sorry, 382 00:18:14,560 --> 00:18:18,359 Speaker 3: Petavesa twenty twenties, because you guys should be aware not 383 00:18:18,440 --> 00:18:21,199 Speaker 3: all bonds are created equal, and this particular bond is 384 00:18:21,240 --> 00:18:23,639 Speaker 3: secured by fifty point one percent of SIDCO, you know, 385 00:18:23,760 --> 00:18:26,600 Speaker 3: SITCO here in the US, Venezuela, the three big huge 386 00:18:26,600 --> 00:18:28,960 Speaker 3: refineries here in the US, as well as convenience and 387 00:18:29,000 --> 00:18:32,480 Speaker 3: gas stations across the country. You know, there has been 388 00:18:32,640 --> 00:18:34,439 Speaker 3: quite a bit of movement there. I'll let Jim go 389 00:18:34,520 --> 00:18:37,119 Speaker 3: into it a little bit about Paul Singer and the 390 00:18:37,119 --> 00:18:40,280 Speaker 3: folks at Elliott and some of the recovery that's already 391 00:18:40,320 --> 00:18:43,000 Speaker 3: been priced into that particular issue. 392 00:18:42,720 --> 00:18:44,600 Speaker 4: Right, and that bond never really sold off as much 393 00:18:44,640 --> 00:18:48,399 Speaker 4: as the rest of the Venezuela and Pedasa debt, and 394 00:18:48,440 --> 00:18:51,000 Speaker 4: it's now trading at par so the claim value is 395 00:18:51,000 --> 00:18:53,400 Speaker 4: obviously very very real in that and that's working its 396 00:18:53,400 --> 00:18:56,000 Speaker 4: way through the court system. We don't know that we 397 00:18:56,240 --> 00:18:59,240 Speaker 4: preferred to put the risk in lower dollar price bonds 398 00:18:59,240 --> 00:19:01,320 Speaker 4: and try to get somemize more of the upside, but 399 00:19:02,000 --> 00:19:04,160 Speaker 4: I'm very happy that that's working its way through. I'm 400 00:19:04,600 --> 00:19:07,520 Speaker 4: I'm happy for the bondholders that they'll get some recovery 401 00:19:07,560 --> 00:19:08,920 Speaker 4: value there, and I think that's appropriate. 402 00:19:10,000 --> 00:19:11,960 Speaker 2: Let me ask you about Latin America, because you twenty 403 00:19:11,960 --> 00:19:14,639 Speaker 2: eight percent of the fun is in Latin America. A 404 00:19:14,640 --> 00:19:16,760 Speaker 2: couple of weeks ago we did our twenty six ets 405 00:19:16,840 --> 00:19:19,640 Speaker 2: to Watch in twenty six Joel knows. I picked OTGL, 406 00:19:19,680 --> 00:19:22,280 Speaker 2: which is a latinam ETF. I saw the news in 407 00:19:22,359 --> 00:19:25,200 Speaker 2: Chile about their new leader there. Just saw what happen 408 00:19:25,240 --> 00:19:29,280 Speaker 2: in Argentina. That stock market was on fire. And I 409 00:19:29,320 --> 00:19:32,000 Speaker 2: know from covering ets for twenty years, if there's ever 410 00:19:32,119 --> 00:19:34,879 Speaker 2: like even a little hope that a pro business leader 411 00:19:35,160 --> 00:19:38,119 Speaker 2: takes over for a socialist, the market goes wild. 412 00:19:38,200 --> 00:19:38,400 Speaker 3: Right. 413 00:19:38,680 --> 00:19:40,840 Speaker 2: I always say it's a geopolitical sports book. Is these 414 00:19:40,840 --> 00:19:43,960 Speaker 2: single country em ETFs. You have a lot of these 415 00:19:44,000 --> 00:19:46,280 Speaker 2: in here, and like Ecuador was a big winner, you 416 00:19:46,280 --> 00:19:49,919 Speaker 2: know in Latin America, how big is this story of 417 00:19:50,040 --> 00:19:51,120 Speaker 2: political change there? 418 00:19:51,480 --> 00:19:54,160 Speaker 4: It is big because we are shifting more towards the right, 419 00:19:54,240 --> 00:19:57,040 Speaker 4: and we had shifted more towards the left. A lot 420 00:19:57,040 --> 00:19:59,840 Speaker 4: of reasons why, but the shift towards the right is 421 00:20:00,119 --> 00:20:02,760 Speaker 4: very important. If you look at a country like Argentina, 422 00:20:02,920 --> 00:20:05,880 Speaker 4: ten percent yields You've had a big transformation there. You've 423 00:20:05,880 --> 00:20:08,600 Speaker 4: had a pro market government that came in and put 424 00:20:08,640 --> 00:20:13,200 Speaker 4: some very significant fiscal discipline. Great team obviously engage with 425 00:20:13,240 --> 00:20:16,399 Speaker 4: the US Treasury, which has been well publicized, and all 426 00:20:16,440 --> 00:20:19,040 Speaker 4: of that is transformative from a country standpoint. So if 427 00:20:19,080 --> 00:20:21,119 Speaker 4: you look down the road, you're going to see a 428 00:20:21,160 --> 00:20:23,280 Speaker 4: lot of foreign direct invests of going in Argentina. Do 429 00:20:23,440 --> 00:20:26,160 Speaker 4: the GDP coming down, inflation coming down, et cetera, which 430 00:20:26,200 --> 00:20:28,200 Speaker 4: is we want to be part of that story. 431 00:20:29,640 --> 00:20:31,960 Speaker 1: And how do you decide that twenty eight percent is 432 00:20:32,000 --> 00:20:32,960 Speaker 1: the right number? 433 00:20:33,200 --> 00:20:36,359 Speaker 4: Yeah, So there's a lot of opportunities around the world. 434 00:20:36,359 --> 00:20:39,240 Speaker 4: You mentioned Lebanon and Ukraine, and there's a lot of 435 00:20:39,240 --> 00:20:42,320 Speaker 4: Sub Saharan Africa, so it's kind of a nice buyer's 436 00:20:42,320 --> 00:20:45,040 Speaker 4: market out there. So the twenty eight percent of Latin America, 437 00:20:45,480 --> 00:20:48,639 Speaker 4: we don't have a huge weight in Mexican sovereign right now, 438 00:20:48,640 --> 00:20:50,560 Speaker 4: we don't have a huge weight in Chile. A lot 439 00:20:50,560 --> 00:20:52,480 Speaker 4: of things going very very well. The yields aren't high 440 00:20:52,560 --> 00:20:54,719 Speaker 4: enough for us at this point. But we do like 441 00:20:55,200 --> 00:20:57,360 Speaker 4: you know, Venezuela, and we like Argentina, we like Ecuador, 442 00:20:57,400 --> 00:21:00,000 Speaker 4: We like countries such as that and that gets you 443 00:21:00,080 --> 00:21:02,400 Speaker 4: from the bottom up to your desired weight. But those 444 00:21:02,400 --> 00:21:05,919 Speaker 4: are other opportunities around the globe which are equally as fascinating. 445 00:21:06,119 --> 00:21:07,560 Speaker 3: Well, I mean, you know, let me just expand a 446 00:21:07,600 --> 00:21:09,480 Speaker 3: little bit on that pro right pivot across the whole 447 00:21:09,480 --> 00:21:11,359 Speaker 3: of Latin America, referring to we have a number of 448 00:21:11,400 --> 00:21:13,840 Speaker 3: elections coming up this year. Right, We've already seen Chile, 449 00:21:13,960 --> 00:21:16,000 Speaker 3: that's the pro right pivot. By pro right, we mean 450 00:21:16,040 --> 00:21:18,960 Speaker 3: more business friendly, more of a pro US pivot. We've 451 00:21:19,000 --> 00:21:21,840 Speaker 3: got Peru coming up, and we've got quite frank Columbia 452 00:21:21,840 --> 00:21:24,200 Speaker 3: coming up, sorry in May, and we all know what's 453 00:21:24,240 --> 00:21:26,800 Speaker 3: going on there. And the fact is the Columbia President, 454 00:21:27,240 --> 00:21:29,840 Speaker 3: Gustavo Petro can't sit for another term, right, so there 455 00:21:29,880 --> 00:21:32,480 Speaker 3: will be changed. So by and large, the next person 456 00:21:32,480 --> 00:21:35,080 Speaker 3: sitting in that seat will undoubtedly be more pro US 457 00:21:35,119 --> 00:21:37,919 Speaker 3: than the current administration. And then you've got Brazil at 458 00:21:37,920 --> 00:21:39,320 Speaker 3: the end of the end. Now, don't get me wrong, 459 00:21:39,800 --> 00:21:41,200 Speaker 3: Lula has nine lives. 460 00:21:41,240 --> 00:21:41,760 Speaker 1: We all know this. 461 00:21:42,040 --> 00:21:45,399 Speaker 3: But you know, this pro right pivot that's going on 462 00:21:45,480 --> 00:21:48,080 Speaker 3: across the whole of Latin America is real, and it 463 00:21:48,119 --> 00:21:50,000 Speaker 3: makes sense, and it's good for business, and it's good 464 00:21:50,000 --> 00:21:51,560 Speaker 3: for the bond prices, and that's the way the market 465 00:21:51,640 --> 00:21:54,240 Speaker 3: tends to be trading. Here one thing about Venezuela. If 466 00:21:54,280 --> 00:21:55,879 Speaker 3: you want to kind of read through into what this 467 00:21:55,960 --> 00:21:59,000 Speaker 3: means for financial markets and for investors, and again Latin 468 00:21:59,040 --> 00:22:03,520 Speaker 3: America speaks to this out and clear commodities, not just oil, 469 00:22:03,720 --> 00:22:06,199 Speaker 3: but minerals and metals as well. Right, And you know, 470 00:22:06,240 --> 00:22:08,159 Speaker 3: if you just look at you know, Venezuela, it's a 471 00:22:08,160 --> 00:22:10,200 Speaker 3: top three holder of in ground gold. If you look 472 00:22:10,240 --> 00:22:12,879 Speaker 3: at you know, gas, it's the seventh largest holder of 473 00:22:12,920 --> 00:22:15,880 Speaker 3: gas reserves in the world. It's obviously got the largest 474 00:22:16,200 --> 00:22:18,320 Speaker 3: proven reserves of oil in the world. If you think 475 00:22:18,320 --> 00:22:21,080 Speaker 3: about this, if the US actually does have some modicum 476 00:22:21,119 --> 00:22:24,560 Speaker 3: of say over you know, energy supply or oil supply 477 00:22:24,640 --> 00:22:27,120 Speaker 3: coming out of Venezuela, you take Gyana, you take Venezuela, 478 00:22:27,119 --> 00:22:29,199 Speaker 3: and you take the US and you add it all together, 479 00:22:29,720 --> 00:22:31,720 Speaker 3: the US is going to have I guess a say, 480 00:22:31,760 --> 00:22:34,760 Speaker 3: over thirty percent of the world's oil reserves. That's a 481 00:22:34,880 --> 00:22:38,760 Speaker 3: massive geopolitical shift, considering Saudi Arabia controls only what twelve 482 00:22:38,760 --> 00:22:42,000 Speaker 3: to fourteen percent, So this is this is kind of 483 00:22:42,040 --> 00:22:57,320 Speaker 3: striking and this is pretty big news. 484 00:22:51,400 --> 00:22:54,240 Speaker 2: All right, Jim, we've covered Latin America, Venezuela. Now your 485 00:22:54,280 --> 00:22:57,000 Speaker 2: portfolio again. I look at it and I just it's 486 00:22:57,040 --> 00:22:59,120 Speaker 2: like a trip around the globe. You know, it's really 487 00:22:59,119 --> 00:23:01,960 Speaker 2: it's there's Honestly, there's a country year I'd never even 488 00:23:01,960 --> 00:23:05,159 Speaker 2: heard of, and I feel like I'm pretty smart. But anyway, 489 00:23:05,520 --> 00:23:07,399 Speaker 2: I'm gonna yell out a country or I'll say it. 490 00:23:07,400 --> 00:23:09,840 Speaker 2: I won't yell it, but I'll say a country lightning round. 491 00:23:10,160 --> 00:23:13,720 Speaker 2: You guys, give me real quick, like you're one sentence 492 00:23:13,800 --> 00:23:16,000 Speaker 2: or two sentence take on this country in terms of 493 00:23:16,040 --> 00:23:18,120 Speaker 2: your you know, optimism or pessimism. 494 00:23:18,200 --> 00:23:18,480 Speaker 4: Okay. 495 00:23:18,640 --> 00:23:22,240 Speaker 1: Jim also has to say if he's been there, Yeah, okay, okay. 496 00:23:21,720 --> 00:23:26,000 Speaker 2: Great, okay, all right, Well, Dominican Republic. 497 00:23:25,920 --> 00:23:30,560 Speaker 4: Been there, So a shift to the right. Similar to 498 00:23:30,640 --> 00:23:34,200 Speaker 4: our prior conversation, a lot of yield tourism is up. 499 00:23:34,280 --> 00:23:38,480 Speaker 4: It's a significant part been upgraded. Spreads your continue to tighten. 500 00:23:38,560 --> 00:23:41,120 Speaker 3: You gotta let me talk about Dominican Republic. It has 501 00:23:41,200 --> 00:23:43,080 Speaker 3: been one of my favorite calls for the better part 502 00:23:43,119 --> 00:23:45,000 Speaker 3: of the last not only year, two years. And I'm 503 00:23:45,000 --> 00:23:47,440 Speaker 3: not just talking the dollar denominated debt. They have local 504 00:23:47,480 --> 00:23:50,560 Speaker 3: currency DP denominated debt as well. This is a country 505 00:23:50,600 --> 00:23:53,040 Speaker 3: that is still running a current account deficit with the US, 506 00:23:53,040 --> 00:23:55,119 Speaker 3: so it's not on Trump's radar yet. It is the 507 00:23:55,160 --> 00:23:58,879 Speaker 3: fastest growing economy in you know, Latin America writ large. 508 00:23:59,320 --> 00:24:00,760 Speaker 3: I've been there a couple at times of myself. They 509 00:24:00,760 --> 00:24:03,000 Speaker 3: have some good golf courses, and look, the reality is 510 00:24:03,040 --> 00:24:07,120 Speaker 3: Theminican Republic is it's credit rating, it's credit profiles improving, 511 00:24:07,160 --> 00:24:09,840 Speaker 3: it's friendly the US business, and so yeah, I mean, 512 00:24:09,920 --> 00:24:13,199 Speaker 3: I'm I'm very bullish on Dominican Republic. Okay. 513 00:24:14,040 --> 00:24:18,480 Speaker 4: Sri Lanka have not been there extremely important in geopolitical sense, 514 00:24:18,520 --> 00:24:20,640 Speaker 4: So if you think about where it is in the globe, 515 00:24:20,720 --> 00:24:22,880 Speaker 4: there's a big ocean right around it, so it's very 516 00:24:22,960 --> 00:24:26,040 Speaker 4: very important. China's made some huge in roads there. We 517 00:24:26,080 --> 00:24:29,600 Speaker 4: think that that's changing where we went through a restructuring 518 00:24:29,680 --> 00:24:33,200 Speaker 4: last year. We like the restructured debt a great deal. 519 00:24:33,200 --> 00:24:36,159 Speaker 4: We do think there's been a fairly significant political transformation 520 00:24:36,280 --> 00:24:39,320 Speaker 4: as well. But I think the big important point here 521 00:24:39,359 --> 00:24:42,200 Speaker 4: is how strategically IMPORTANTCE Sri Lanka is in the world, 522 00:24:42,280 --> 00:24:44,960 Speaker 4: and I think the US understands that, it appreciates it. 523 00:24:45,000 --> 00:24:46,840 Speaker 4: So I would expect that that's going to be a 524 00:24:46,920 --> 00:24:48,680 Speaker 4: big focal point for the US going forward. 525 00:24:48,840 --> 00:24:50,480 Speaker 3: Yeah, you know, I've not been to Sri Lanka either, 526 00:24:50,520 --> 00:24:52,640 Speaker 3: but I will say when you think Sri Lanka from 527 00:24:52,640 --> 00:24:55,320 Speaker 3: an investor standpoint, you think China. And by the way, 528 00:24:55,320 --> 00:24:57,560 Speaker 3: this just dials right back to Venezuela. I mean, did 529 00:24:57,600 --> 00:24:59,639 Speaker 3: you know that loan commitments by country coming out of 530 00:24:59,680 --> 00:25:02,960 Speaker 3: the China the Development Bank. Venezuela is the sixth largest 531 00:25:03,680 --> 00:25:06,840 Speaker 3: country that has received loans from China. Right, So let's 532 00:25:06,840 --> 00:25:09,120 Speaker 3: think about, you know, a workout scenario for these Veny 533 00:25:09,160 --> 00:25:12,480 Speaker 3: and PETABSA bondholders. Right, there's a lot of bilateral loans 534 00:25:12,520 --> 00:25:14,600 Speaker 3: to China and Russia that need to get paid off 535 00:25:14,640 --> 00:25:17,959 Speaker 3: as well. And where do you sit within the capital stack, right, 536 00:25:18,000 --> 00:25:21,520 Speaker 3: Who's priority, who's subordinated? These are questions that are going 537 00:25:21,600 --> 00:25:23,679 Speaker 3: to take a while to kind of come through. This 538 00:25:23,720 --> 00:25:26,560 Speaker 3: is going to be a very complicated restructuring in Venezuela. 539 00:25:26,600 --> 00:25:27,879 Speaker 3: But when I think of Sri Lanka, I think of 540 00:25:27,920 --> 00:25:30,320 Speaker 3: the port that's been funded by China. I think of 541 00:25:30,840 --> 00:25:32,600 Speaker 3: you know, its ties to China, and whether or not 542 00:25:32,640 --> 00:25:34,520 Speaker 3: those continue or not is going to be, you know, 543 00:25:34,640 --> 00:25:37,160 Speaker 3: really front and center in the eyes of US dollar investors. 544 00:25:37,520 --> 00:25:40,720 Speaker 2: All right, this Ivory coast, I couldn't even tell you where. 545 00:25:40,920 --> 00:25:42,720 Speaker 2: I know it's in Africa, but like I couldn't point 546 00:25:42,720 --> 00:25:44,720 Speaker 2: it out on a map. What's going on there? 547 00:25:44,880 --> 00:25:50,520 Speaker 4: High growth, recently upgraded, cocre prices are high. It is 548 00:25:50,600 --> 00:25:52,840 Speaker 4: really a poster child for what to do right in 549 00:25:53,440 --> 00:25:57,000 Speaker 4: subterran Africa. We expect that that is a country that's 550 00:25:57,040 --> 00:25:58,879 Speaker 4: going to continue to see a lot of foreign directive 551 00:25:58,880 --> 00:26:02,280 Speaker 4: investment going in. I mean, it's major export is coco, 552 00:26:02,359 --> 00:26:04,359 Speaker 4: so we like to see high coco prices there. But 553 00:26:04,800 --> 00:26:06,920 Speaker 4: they've really gotten to handle on the finances and it's 554 00:26:06,960 --> 00:26:09,280 Speaker 4: been reflected in the fact that they've been upgraded and 555 00:26:09,720 --> 00:26:12,199 Speaker 4: spreads and yields are are much lower. So it's one 556 00:26:12,200 --> 00:26:13,960 Speaker 4: of the countries we've actually started to take off a 557 00:26:14,000 --> 00:26:15,000 Speaker 4: little bit. It's done so well. 558 00:26:15,080 --> 00:26:16,399 Speaker 3: Yeah, well, I think I think one thing you have 559 00:26:16,440 --> 00:26:18,639 Speaker 3: to point out, even though these are dollar denominated bonds 560 00:26:18,640 --> 00:26:23,480 Speaker 3: from Coutevar, the it's part of Ekowas, so effectively the 561 00:26:23,520 --> 00:26:26,720 Speaker 3: currency that's used domestically on the ground in Kotevar is 562 00:26:26,760 --> 00:26:29,200 Speaker 3: the Euro. Right, it's a French ship's former French colony, 563 00:26:29,240 --> 00:26:30,840 Speaker 3: and that whole region there's probably seven or eight of 564 00:26:30,880 --> 00:26:33,639 Speaker 3: them from beneath to Berkino Fassis Senegal. They're all you know, 565 00:26:33,680 --> 00:26:37,320 Speaker 3: euro denominated, so you know their balance sheets and their 566 00:26:37,520 --> 00:26:40,000 Speaker 3: sort of trade deficits are a little bit easier to read, 567 00:26:40,040 --> 00:26:42,480 Speaker 3: so to speak. But yes, Kotevar has had a wonderful run, 568 00:26:42,800 --> 00:26:46,119 Speaker 3: unlike it's partners Senegal. But the risk there is a 569 00:26:46,160 --> 00:26:48,120 Speaker 3: lot of the risk were seeing in places like Nigeria. 570 00:26:48,160 --> 00:26:51,040 Speaker 3: It is very very close to the Sahel region, where 571 00:26:51,119 --> 00:26:52,639 Speaker 3: you know, there's a lot of terrorism, there's a lot 572 00:26:52,680 --> 00:26:55,280 Speaker 3: of isis, there's a lot of you know, potential for 573 00:26:55,320 --> 00:26:57,399 Speaker 3: things to kind of derail the success story there. But 574 00:26:57,840 --> 00:27:00,880 Speaker 3: now it's it's managed really really well well and it's 575 00:27:00,880 --> 00:27:03,199 Speaker 3: had some considerable upside. Yeah, all right. 576 00:27:03,200 --> 00:27:06,160 Speaker 2: Another country I was actually in the last well not 577 00:27:06,240 --> 00:27:10,080 Speaker 2: about fourteen months ago, Vietnam. My wife is of Vietnamese descent, 578 00:27:10,119 --> 00:27:12,359 Speaker 2: so we went there. We go like once every twelve years. 579 00:27:13,000 --> 00:27:16,000 Speaker 2: And look, is a hard working group of people. But 580 00:27:16,280 --> 00:27:19,399 Speaker 2: I don't sense a lot of innovation. Like it's a 581 00:27:19,400 --> 00:27:22,560 Speaker 2: lot of like selling stuff out of the front of 582 00:27:22,600 --> 00:27:26,119 Speaker 2: your house kind of economy, but very hard working. Nobody 583 00:27:26,200 --> 00:27:29,359 Speaker 2: is like slacking off. There are no people just hanging around. Really, 584 00:27:29,400 --> 00:27:32,439 Speaker 2: it's very busy, But what's the deal there, what's the 585 00:27:32,520 --> 00:27:35,240 Speaker 2: trade there? Is that also opening up or is it 586 00:27:35,320 --> 00:27:39,320 Speaker 2: just more you know that they're taking a lot of 587 00:27:39,320 --> 00:27:41,600 Speaker 2: the manufacturing from China. 588 00:27:41,720 --> 00:27:44,240 Speaker 4: They're taking a lot of the manufacturing from China. That's 589 00:27:44,320 --> 00:27:46,640 Speaker 4: pretty well known and it's also known by the Trump 590 00:27:46,680 --> 00:27:49,000 Speaker 4: administration as well. So if you think of the tariffs 591 00:27:49,000 --> 00:27:51,800 Speaker 4: that were put in place, and really outside of China, 592 00:27:52,560 --> 00:27:56,520 Speaker 4: Brazil to a certain extent, Vietnam and maybe handful of 593 00:27:56,560 --> 00:27:59,600 Speaker 4: others really didn't affect our market, but Vietnam is one 594 00:27:59,640 --> 00:28:02,600 Speaker 4: that that does stand out to us as being more vulnerable. 595 00:28:02,640 --> 00:28:05,120 Speaker 4: So that's one that we've taken down more recently. Economy 596 00:28:05,160 --> 00:28:07,639 Speaker 4: is doing very well. It's a hardworking society. It's a 597 00:28:07,640 --> 00:28:11,399 Speaker 4: fantastic long term investment, but probably more from an equity 598 00:28:11,440 --> 00:28:12,280 Speaker 4: standpoint than at debt. 599 00:28:12,320 --> 00:28:14,280 Speaker 1: So there's a moment in which you start to pair 600 00:28:14,359 --> 00:28:16,639 Speaker 1: back because you're just like, this is we've done this 601 00:28:16,720 --> 00:28:19,280 Speaker 1: already and it's had its upside, and now we have 602 00:28:19,320 --> 00:28:21,320 Speaker 1: to kind of laura. So when you go from two 603 00:28:21,359 --> 00:28:23,600 Speaker 1: to four percent in Venezuela, you go from four to 604 00:28:23,600 --> 00:28:24,720 Speaker 1: two in Vietnam. 605 00:28:24,400 --> 00:28:26,159 Speaker 4: Right, And that happens a lot in our markets. You know, 606 00:28:26,200 --> 00:28:28,639 Speaker 4: things get ahead of themselves and the euphoria comes in, 607 00:28:28,720 --> 00:28:31,440 Speaker 4: and I think in a country lament Vietnam, I understand 608 00:28:31,520 --> 00:28:33,240 Speaker 4: why just don't you don't get a lot of upside 609 00:28:33,240 --> 00:28:33,600 Speaker 4: out of that? 610 00:28:33,760 --> 00:28:35,639 Speaker 1: And how active do you have to be as an 611 00:28:35,640 --> 00:28:38,080 Speaker 1: active manager in a portfolio like this? How often do 612 00:28:38,080 --> 00:28:39,880 Speaker 1: you have to be recalibrating these numbers? 613 00:28:40,160 --> 00:28:42,360 Speaker 4: I wish more often. These things take a while to 614 00:28:42,440 --> 00:28:46,040 Speaker 4: play out, so it's usually you know, our well, our 615 00:28:46,520 --> 00:28:48,680 Speaker 4: holding period can only be anywhere from a week to 616 00:28:49,560 --> 00:28:52,120 Speaker 4: a year and a half on average, so they take 617 00:28:52,160 --> 00:28:54,080 Speaker 4: a while to play out. We'd love to see him 618 00:28:54,080 --> 00:28:57,200 Speaker 4: play out a little faster sometimes, but more often than not, 619 00:28:57,240 --> 00:28:58,960 Speaker 4: they just take a while to play out. And Vietnam's 620 00:28:58,960 --> 00:29:01,600 Speaker 4: are a classic points trades wall under two hundred now 621 00:29:01,680 --> 00:29:04,440 Speaker 4: and spread and extra yield, so that doesn't offer a 622 00:29:04,480 --> 00:29:05,680 Speaker 4: lot of value for us, you. 623 00:29:05,600 --> 00:29:08,080 Speaker 3: Know, Jim, how much Vietnam is their outstanding right now? 624 00:29:08,080 --> 00:29:10,520 Speaker 3: I mean I've always struggled to find any dollar dollar 625 00:29:10,680 --> 00:29:12,120 Speaker 3: pay Vietnamese bombs. 626 00:29:12,440 --> 00:29:15,920 Speaker 4: There's there's one, but I mean there's really not a 627 00:29:16,440 --> 00:29:16,960 Speaker 4: lot out there. 628 00:29:17,000 --> 00:29:18,920 Speaker 3: Then hence your point that it's an equity play, right, 629 00:29:18,920 --> 00:29:20,480 Speaker 3: I mean, if you want to get your Vietnam explorerure. 630 00:29:20,560 --> 00:29:21,400 Speaker 3: It's easy to do with VIA. 631 00:29:21,520 --> 00:29:22,840 Speaker 4: I would do an aequity market, right. 632 00:29:23,400 --> 00:29:26,240 Speaker 2: Okay. Actually, there's like two countries in here I've never 633 00:29:26,280 --> 00:29:28,560 Speaker 2: heard of, and then a third one that I faintly 634 00:29:28,680 --> 00:29:31,840 Speaker 2: think I might have heard of, but I don't even know. Okay, 635 00:29:31,880 --> 00:29:34,760 Speaker 2: don't make fun of me. I'm just being honest here, Okay, 636 00:29:35,000 --> 00:29:36,480 Speaker 2: I'm just gonna spell it. I mean, I'll try to 637 00:29:36,480 --> 00:29:38,720 Speaker 2: say that's it. Surinam? 638 00:29:39,400 --> 00:29:43,320 Speaker 4: What is that? Great little country? Were also defaulted its dead. 639 00:29:43,400 --> 00:29:46,000 Speaker 4: Latin America also defaulted on its debt and has been 640 00:29:46,520 --> 00:29:47,920 Speaker 4: restructured it. How did you know? 641 00:29:47,960 --> 00:29:49,640 Speaker 1: I was going to say that I know everything. 642 00:29:50,000 --> 00:29:51,000 Speaker 2: That's pretty good, dude. 643 00:29:51,000 --> 00:29:52,360 Speaker 1: I've been doing this far too long. 644 00:29:53,960 --> 00:29:59,000 Speaker 3: So yeah, I mean Surinam is northeast Latin Erica, you know, 645 00:29:59,160 --> 00:30:01,240 Speaker 3: not far from g Know where you know Excellent Mobile 646 00:30:01,240 --> 00:30:03,560 Speaker 3: has some offshore drilling rigs in place there, and you 647 00:30:03,600 --> 00:30:06,480 Speaker 3: know some of the spillover people would kind of argue 648 00:30:06,480 --> 00:30:07,960 Speaker 3: for is you know, some of the oil wealth that's 649 00:30:08,000 --> 00:30:11,800 Speaker 3: being generated offshore outside of Guiana can kind of filter 650 00:30:11,880 --> 00:30:14,080 Speaker 3: over into Surnon. But they've had their issues. They defaulted, 651 00:30:14,080 --> 00:30:15,959 Speaker 3: as you know, and you know it's it is a country. 652 00:30:16,000 --> 00:30:18,440 Speaker 3: I mean, what's what's its biggest export? I mean, well 653 00:30:18,680 --> 00:30:20,920 Speaker 3: it is oil, right, yeah? So I mean so yeah, 654 00:30:20,960 --> 00:30:22,760 Speaker 3: I mean you know, go figure right, I mean what 655 00:30:22,800 --> 00:30:24,280 Speaker 3: do I know? But I think I think yeah, the 656 00:30:24,320 --> 00:30:26,120 Speaker 3: bonds are probably they've come back quite a bit, but 657 00:30:26,160 --> 00:30:28,280 Speaker 3: there's probably some upside there if you listen to people 658 00:30:28,280 --> 00:30:29,920 Speaker 3: who are far smarter than I had. 659 00:30:30,000 --> 00:30:32,000 Speaker 2: Joelhead, you heard of that country? Okay, thank you for 660 00:30:32,080 --> 00:30:34,240 Speaker 2: being honest. One and one more I'd never heard. I'll 661 00:30:34,240 --> 00:30:36,520 Speaker 2: spell it, see if you can guess it. Damien uh 662 00:30:36,920 --> 00:30:41,240 Speaker 2: cursik san No, I have heard of that barely though gabone. 663 00:30:40,960 --> 00:30:43,760 Speaker 3: Gave bones Easybone's an old steward. 664 00:30:46,520 --> 00:30:48,840 Speaker 2: Yes, because I didn't look that bad last time. But 665 00:30:49,280 --> 00:30:50,280 Speaker 2: where's this country? 666 00:30:50,480 --> 00:30:53,480 Speaker 4: Africa as well? So it's an interesting little little oil 667 00:30:53,560 --> 00:30:56,640 Speaker 4: trade if you think about certain think about how to 668 00:30:57,080 --> 00:30:59,960 Speaker 4: how to frame it so it suffers from oil volatile. 669 00:31:00,400 --> 00:31:03,760 Speaker 4: It's a small country. We happen to like it right 670 00:31:03,840 --> 00:31:06,840 Speaker 4: now because we know it's oil. Prices here are are 671 00:31:06,920 --> 00:31:09,600 Speaker 4: favorable to it. But it's I would say, on the 672 00:31:10,080 --> 00:31:12,600 Speaker 4: on the spectrum of being dicey non dicey, it's one 673 00:31:12,600 --> 00:31:15,920 Speaker 4: of the dice er credits. So we're pretty nimble in Gabon, 674 00:31:16,080 --> 00:31:18,880 Speaker 4: but right now it's pretty attractive. 675 00:31:19,200 --> 00:31:22,120 Speaker 1: How important is it to visit any of these countries. 676 00:31:22,040 --> 00:31:24,800 Speaker 4: I'd say it's very important. I have not been to Gabone. 677 00:31:24,800 --> 00:31:27,320 Speaker 4: I will say that Evan most of the other countries 678 00:31:27,360 --> 00:31:29,320 Speaker 4: in our market, but it's very important. You know what 679 00:31:29,400 --> 00:31:32,040 Speaker 4: you do. You meet with government officials, you try to 680 00:31:32,080 --> 00:31:35,800 Speaker 4: meet with the Secretary Finance, the economy mysteries, you meet 681 00:31:35,840 --> 00:31:39,200 Speaker 4: with a lot of the embassies. Great intel there. I 682 00:31:39,280 --> 00:31:41,000 Speaker 4: mean it helps you paint a picture. So you can 683 00:31:41,040 --> 00:31:43,120 Speaker 4: have all the great assumptions in the world, but when 684 00:31:43,160 --> 00:31:45,000 Speaker 4: you get there, you really do figure out if they're 685 00:31:45,080 --> 00:31:46,720 Speaker 4: right or if they're wrong, and that's what's helpful. So 686 00:31:46,800 --> 00:31:49,239 Speaker 4: we typically visit thirty five forty countries a year. 687 00:31:50,160 --> 00:31:54,880 Speaker 1: Jim, if we put on that optimistic here for Venezuela 688 00:31:54,920 --> 00:31:57,720 Speaker 1: as we wrap restructuring of the debt is something that 689 00:31:58,040 --> 00:32:00,080 Speaker 1: seems like it's going to be out there. As if 690 00:32:00,080 --> 00:32:02,080 Speaker 1: we look ahead to what's next for Venezuela with that 691 00:32:02,160 --> 00:32:05,120 Speaker 1: optimism had on, what would that restructuring look like and 692 00:32:05,160 --> 00:32:08,000 Speaker 1: how would impact how you view investing there. 693 00:32:08,200 --> 00:32:11,040 Speaker 4: So we would take our defaulted bonds in dollars and 694 00:32:11,120 --> 00:32:14,280 Speaker 4: we'd sit across the table from Venezuelan's. Probably the IMF 695 00:32:14,320 --> 00:32:16,520 Speaker 4: would be involved in assuming you a treasury, other investors, 696 00:32:16,560 --> 00:32:20,200 Speaker 4: et cetera, and you hammer out a restructuring which allows 697 00:32:20,280 --> 00:32:23,120 Speaker 4: them to grow. So the debt payments have to be lower. 698 00:32:23,280 --> 00:32:25,080 Speaker 4: The probably the stock of debt needs to be lower 699 00:32:25,160 --> 00:32:27,440 Speaker 4: as well, and it's something that gives us the ability 700 00:32:27,480 --> 00:32:30,240 Speaker 4: to get paid back. So that restructuring is very similar 701 00:32:30,320 --> 00:32:33,000 Speaker 4: to the I would expect to the restructurings that we 702 00:32:33,120 --> 00:32:36,200 Speaker 4: dealt with in the early nineteen nineties, where you're exchanging 703 00:32:36,240 --> 00:32:39,360 Speaker 4: your default the debt for new debt. There also may 704 00:32:39,440 --> 00:32:42,160 Speaker 4: be what we call a new money component, which means 705 00:32:42,200 --> 00:32:44,160 Speaker 4: you may want to put in more money. There could 706 00:32:44,200 --> 00:32:46,680 Speaker 4: be an element there. There could be a value recovery right, 707 00:32:46,760 --> 00:32:49,560 Speaker 4: or some sort of warrant that's given to you GDP 708 00:32:49,680 --> 00:32:53,040 Speaker 4: warrant or an oil warrant like the old Venezuelan bonds 709 00:32:53,080 --> 00:32:55,400 Speaker 4: that give you some upside if that does work, if 710 00:32:55,440 --> 00:32:57,320 Speaker 4: the plant does work. But ultimately what you're going to 711 00:32:57,320 --> 00:33:00,600 Speaker 4: be doing is exchanging your default the debt for new debt, 712 00:33:00,800 --> 00:33:04,440 Speaker 4: which is then serviced by Venezuela and PETABSA and. 713 00:33:04,480 --> 00:33:07,880 Speaker 3: You have to remember there. I mean, look before before 714 00:33:07,920 --> 00:33:10,160 Speaker 3: the bonds, the fault in twenty seventeen in Venezuela. I 715 00:33:10,240 --> 00:33:13,320 Speaker 3: mean you had nationalization by the jobs by Hugo Chovas 716 00:33:13,360 --> 00:33:15,440 Speaker 3: in his regime of a number of projects on the ground. 717 00:33:15,480 --> 00:33:17,960 Speaker 3: I'm thinking Conical Phillips. I'm thinking x on Mobile. Conical 718 00:33:17,960 --> 00:33:20,560 Speaker 3: Phillips is own ten billion dollars and so that's why 719 00:33:20,640 --> 00:33:22,680 Speaker 3: it's stock popped on the news. But the reality is, 720 00:33:23,040 --> 00:33:25,320 Speaker 3: good luck trying to get somebody to pay you back 721 00:33:25,400 --> 00:33:27,840 Speaker 3: for that. That's all part of a restructuring here and 722 00:33:27,920 --> 00:33:30,000 Speaker 3: the conversations that go hand in hand. And I don't 723 00:33:30,000 --> 00:33:32,320 Speaker 3: know if you just saw the news. You know, just 724 00:33:32,400 --> 00:33:35,400 Speaker 3: over the weekend, President Trump had a bunch of US 725 00:33:35,480 --> 00:33:38,080 Speaker 3: oil majors into the White House to talk about what 726 00:33:38,240 --> 00:33:41,360 Speaker 3: a you know, Venezuela structuring might look like from from 727 00:33:41,360 --> 00:33:43,680 Speaker 3: a perspective of investing, you know, US dollars into the 728 00:33:43,720 --> 00:33:46,640 Speaker 3: oil sector. He didn't like what x On Mobile had 729 00:33:46,680 --> 00:33:49,160 Speaker 3: to say. So, you know, this is a company that 730 00:33:49,360 --> 00:33:52,160 Speaker 3: is owed one point five one point six billion because 731 00:33:52,200 --> 00:33:56,480 Speaker 3: their assets were nationalized previously. That Venezuelan government has already 732 00:33:56,560 --> 00:33:58,520 Speaker 3: paid back two hundred and twenty five million of that. 733 00:33:58,640 --> 00:34:01,920 Speaker 3: So they've already almost agreed that they owe this money, right, 734 00:34:02,080 --> 00:34:03,920 Speaker 3: so good luck try and I new tho she hd 735 00:34:03,920 --> 00:34:05,800 Speaker 3: all this at It's going to be very, very complicated. 736 00:34:05,840 --> 00:34:08,560 Speaker 3: There's a lot of different investoral interests involved. I mean, 737 00:34:08,680 --> 00:34:10,440 Speaker 3: and like I said, the Chinese and Russian have a 738 00:34:10,480 --> 00:34:12,480 Speaker 3: lot of bilateral loans in place as well. I mean, 739 00:34:12,520 --> 00:34:13,880 Speaker 3: where do they fit in the capital stack? 740 00:34:15,000 --> 00:34:16,520 Speaker 1: Well, this is what we get to watch. 741 00:34:17,280 --> 00:34:20,000 Speaker 2: Yeah, no, it's fascinating and like this kind of stuff 742 00:34:20,120 --> 00:34:23,719 Speaker 2: like is nowhere in a sixty forty portfolio. I mean, 743 00:34:23,840 --> 00:34:26,759 Speaker 2: so I like ETFs that bring something different that your 744 00:34:26,800 --> 00:34:30,000 Speaker 2: normal like sort of beta. This definitely checks that box. 745 00:34:30,600 --> 00:34:32,640 Speaker 1: Jim Damien, thanks for taking a sum of tour the 746 00:34:32,680 --> 00:34:43,040 Speaker 1: world our pleasure. Thank you, Thanks for listening to Trillions 747 00:34:43,400 --> 00:34:45,480 Speaker 1: until next time. You can find us on the Bloomberg Terminal, 748 00:34:45,640 --> 00:34:50,040 Speaker 1: Bloomberg dot com, Apple Podcasts, Spotify, or wherever else you'd 749 00:34:50,040 --> 00:34:51,880 Speaker 1: like to listen. We'd love to hear from you. Hit 750 00:34:51,960 --> 00:34:54,560 Speaker 1: us up on social I'm at Joel Weber Show, He's 751 00:34:54,680 --> 00:34:58,680 Speaker 1: at Eric Balcino's. Trillions is produced by Magnus Hendrickson. Brendan 752 00:34:58,760 --> 00:35:01,640 Speaker 1: Newman is our executive Pretty Sir Sage Bauman is the 753 00:35:01,680 --> 00:35:02,760 Speaker 1: head of Bloomberg Podcast.