The duo has advanced cash to several of Argentina's 22 provinces in exchange for their annual support due from Buenos Aires for the next six years. Cooper and Nemerever don't expect to cry over Argentina. They believe that it will probably continue meeting its obligations, but even if it can't, a debt workout will just pay them back on somewhat different terms. Cooper and Nemerever's strategy is based on the premise that honoring a contract is paramount for any country in the global economy, and restructuring a loan can be seen in that spirit. The approach has served Grantham Mayo investors well.
China exemplifies what most fund managers like to see from emerging-market countries.
It has a good credit rating and a booming economy. But because investors know this, Chinese debt trades at low yields. Grantham Mayo holds none. He'd rather own debt from Nigeria. The so-called Brady bonds, trading at 60 cents on the dollar, are supported by 30 cents per bond in U.S. Treasury holdings, making for a floor in value.