“Globally, the strength of the dollar is going to cause a lot of problems,” he says. “Some emerging market countries out there are squealing at the moment.
It was William White, the former head of the Bank for International Settlements, who said not long ago that something like $6trn of emerging market debt is denominated in dollars. As the dollar gets stronger, this is going to be more and more painful for emerging markets to finance that debt.”
Late last year, Bezalel bought into Russia with issues from the likes of Luke Oil, Gazprom and steel specialist Severstal.
He says: “These are companies with a lot of cash on their balance sheets. Despite the risks, they are on yields of around 7% plus, and you are being compensated.”
Argentina was also identified by him in the middle of last year as a really compelling distress trade where he made double-digit returns.
One region Bezalel particularly likes at the moment is India and he plans to initiate positions “pretty soon” in the fund. “The Indian rupee has actually done very well versus sterling and the euro,” he says.
Euro nerves setting in
However, he is fundamentally nervous about the situation in Europe over the longer term. “Right now brings me back to what Chuck Prince once said before the subprime crisis: ‘When the music is playing, you’ve got to get up and dance, and we’re still dancing.’
