Ninety One's Middle East CIO Sees 'Huge Growth' in Credit Opportunities

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00:00You got a different title since the last time we spoke. Congratulations.

00:03Thank you very much.

00:04Talk to me about what 91 has in terms of ambitions for the region. I believe you have offices now

00:09in Saudi Arabia and in the UAE. Yes, we do indeed. I think the move to the region,

00:16and I'm just relocating here to Riyadh right now, is really about the ambition that we see

00:23in the growth of the fixed income markets, equity markets generally. And so our plans to

00:29build a team, build an office here, and really sort of be part of the evolution of the markets

00:35is something that we see as a real growth for the business in the next 10 months.

00:38Yeah, it's so interesting because, you know, in prior interviews, we've spoken about emerging

00:42market debt, sovereign debt, corporate debt. And of course, Saudi Arabia has been picking up a lot

00:48in terms of borrowing issuance. Do you see that as perhaps one of the catalysts for you wanting

00:53to move here and, you know, in your words, to be part of that evolution?

00:57Yeah, I mean, honestly, the diversification across the whole of the GCC from non-oil revenues is

01:05something that lends its way to much deeper capital markets as we see that diversification come through

01:12in every field in the economy. And so that's really what excites us most. You know, you can see from the

01:20banks that have traditionally really owned the credit lending space actually now reaching limits,

01:28which paves the way for investors like us to come in and fill the gaps.

01:31Yeah. So I see you've also recently launched your first regional investment solution in MENA Debt. What does that entail?

01:38Yeah, that's right. It's across the whole of MENA. And the idea right now, it's predominantly dollars.

01:45But as we see markets evolve in local currency, as we see securitizations evolve, etc., there'll be much more room

01:53for a truly diversified fixed income product. How is liquidity in this part of the world versus other EM markets

01:59that you look at? In dollar space, it's incredibly liquid. So mainly due to the very high credit quality

02:05that we traditionally see here. Yeah. And we're seeing a lot of Asian buyers come in now, which

02:11in the past, Asia has been a really liquid space. And now we're seeing that come through

02:17and feed through into this region. OK, super interesting. You know, one thing I do want to

02:20mention as well is obviously, you know, 91, your headquarters are in South Africa. What opportunities

02:26do you see for trade between the Gulf and Africa? How will you capitalize on that with this new office?

02:33Yeah, well, I would say that one of the key themes that comes out here is mining assets. That's something

02:42that we have a long history in. But just generally, the trade relations are getting much stronger. So

02:48a lot of the conversations that we're having over the next couple of days relate to that relationship

02:55getting stronger. Yeah. OK, let's zoom out and talk more broadly about macro. I mean, you just heard

03:01me running through the markets. Obviously, it's a big Fed meeting this week. And you look at where stock

03:06markets are trading. You look at how credit spreads are trading. And I just wonder whether

03:11there actually is incremental spread value to be extracted from credit. It's so tight. The landscape

03:18is so tight at the moment. No, for sure. And I think what's really important to recognize,

03:23if not a bit dull, is that the key theme for the last couple of years has been about overall yield

03:29levels. And actually, when you look at overall yield levels, there's still room, particularly

03:34investment grade to see those compressed further, particularly in an environment of a more benign

03:39central bank. Essentially, is this a carry trade? Yes. But at the same time, when you look at some of

03:46the flows that have been happening, and we talk about the decline of US exceptionalism, you're seeing a

03:53pivot away from US credit from non-traditional US investors. And that really plays to the strength of

04:00this region. We're seeing a lot of Asia moving into this region. We've seen China sovereign trade

04:06through treasuries. So even having a premium may not be the case in the future. Yeah. Since you

04:12mentioned US exceptionalism, it's also been a year where the dollar has declined significantly as well.

04:18We're down double digits, like down 10% or so. How has that benefited EM as an asset class? Is that one

04:24of the tailwinds this year? For sure. I mean, traditionally, in an environment where, you know,

04:30you have such sort of questions around risk-free rates, you would have seen emerging markets suffer

04:37on the back. But this has been a shift in market sentiment, a little bit, but not the same as 2010

04:43of good balance sheet, bad balance sheet. But there's definitely a movement happening that is,

04:48in my opinion, long overdue. Okay. And what do you think the biggest risk

04:52is to your asset class looking ahead, apart from the fact that valuation spreads are very tight

04:58going into 2026? Yeah. I mean, clearly, it's that we're at the, we, that we're about to enter

05:05a turndown in the business cycle with defaults picking up. But actually, when you look at the

05:11resilience of company balance sheets, it seems unlikely. So in our opinion, it's more something

05:16that's going to stem from what we've already seen coming out of the U.S., private credit

05:22headlines that come up that shape the market. But we think that that's actually quite neat.

05:27What is your read on Tricolor and First Brands, the situation that came out in the U.S. a few weeks

05:31ago? I mean, I think you're always going to have the occasional story that pops up. Credit lending

05:37standards in private credit have been deteriorating meaningfully. So I think it's likely that you see

05:43more of these events happening. But what's been happening with the shift to private credit

05:48is that public credit has actually become a bit more resilient. So it's unlikely that we see

05:54anything really affecting the public markets in that way. Okay. And then final question to round

06:00things up, you know, where do you see the biggest public credit opportunities right now? We spoke about

06:05in the Middle East. Can you give us more detail about specific countries or duration that you're

06:10targeting? So actually here it's more that we see opportunity for new companies to come

06:15to market. So, you know, part of the job here is to talk to companies that might want to borrow

06:22capital. And actually that's what we see, just a huge growth in credit opportunities here

06:28in the Middle East.

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