Goldman sees promise in Indonesia, Qatar debt

Indonesia and Qatar offer strong opportunities for sovereign debt investors, a senior Goldman Sachs emerging market executive said, as investors seek alternative debt exposures in the wake of the Greek crisis.

Sam Finkelstein, head of the emerging markets debt team at Goldman's asset arm GSAM told Reuters that Indonesia, as a growing economy, offered a "number of positives".

"Indonesia is not a very indebted country, which is part of the problem in mainland Europe," he said, adding the country has also taken steps to simplify its tax system, which has increased revenues while keeping expenses tightly controlled.

As an oil exporter, it is also benefiting from a rebound in commodities, he said.

Finkelstein's team, which manages the $2.5bn Goldman Sachs Global Emerging Market Debt Portfolio, is investing in local currency Indonesian debt and has bought 10-year bonds yielding 9.5 per cent a year.

In the Middle-East, he favours Qatari dollar-denominated sovereign debt. "The bond's spread to United States Treasury bonds is narrow compared to riskier sovereigns, but still offers a very attractive risk return," he said.

Indonesian debt is rated junk by S&P at BB, while Qatar is rated AA-.

Finkelstein is avoiding Eastern Europe where he sees growth prospects compromised in the wake of the Greek sovereign debt crisis, even after the aid package devised by the European Union and the International Monetary Fund.

"From an outlook perspective I am much more optimistic on growth in Asia and Latin America than Eastern Europe," he said.

Inflows into emerging market debt tripled in the past 18 months after these regions emerged relative unscathed from the financial crisis that has decimated most Western economies.

"A lot of the traditional notions that we used to segregate 'emerging' from 'developed' are increasingly blurred. We expect this trend to continue," he said.

In the year to end-April, the fund returned 32.5 per cent, outperforming peers by 4.72 percentage points, according to data from Lipper Global.