Well Prepared For The Post-Carry Trade World

In our last quarterly sovereign risk appraisal in December, we titled the report 'As Good As It Gets?' and we feel that the events of Q107 have borne out this view. Our view throughout the (albeit limited) turmoil in the global markets has remained the same: emerging market fundamentals are highly robust, but are trading at rather rich levels that make additional gains much more difficult to come by. The damage to emerging market credit spreads has naturally been to the countries towards the bottom of our ratings scale, with Turkish, Serbian and Ukrainian spreads all heading higher. Russia, and

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