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Emerging Markets Corporate Research
01 December 2010

Corrected Report (first published on 30 November 2010)

Emerging Markets Corporate Outlook & Strategy for 2011
Positive momentum at a more moderate pace

We corrected the recommendations for the Celulosa Arauco ’17s and ’19s in Table 11 on page 27.

Global EM Corporate Strategy

We target the spread on the CEMBI Broad to reach260bp by the end of 2011 versus 304bp currently and estimate total returns to fall between 6-7% for the full year with the investment grade and high yield segments returning approximately 5.7% and 9.8%, respectively. Based on this return forecast we recommend investors enter 2011 overweight the CEMBI Broad relative to the EMBIG, which is forecast to end 2011 at a spread of 250bp for returns in the4-5% range. Within the asset class, we expect high yield to outperform investment grade with the BB segment of the index representing the most attractive part of the credit curve. Based on J.P. Morgan’s 2011 forecasts for US investment-grade and high-yield credit indices, we also see EM Corporates delivering higher returns with favorable credit trends in EM driving a further narrowing in the basisbetween EM and developed market spreads. Although the overall technical backdrop is expected to moderate from the strong conditions enjoyed in 2010, they should remain supportive as potentially slower inflows are offset by supply of new issuance falling back to more normalized levels. On the supply side, we forecast gross supply to reach US$165 billion which equates to an overall net financinggap (gross supply minus coupons and amortizations) of approximately US$74.7 billion for the full year.
Current 304 239 551 Year-to-date 205,673 66,047 40,897 72,438 26,291 33.65% 40.25% 26.10% Year-to-date 1.30% 0.00% 1.20% 2.10% 1.90% 2011E 260 200 445 2011E 165,800 45,000 35,000 45,000 40,800 39.0% 35.7% 25.3% 2011E 0.8% 0.5% 0.4% 0.6% 3.1%

Warren Mar AC

Global EM Corporate AC J.P. Morgan Securities LLC Warren Mar
(1-212) 834-4274

Jonny Goulden LLC J.P. Morgan Securities Ltd.

Asia Credit Research
J.P. Morgan Securities (Asia Pacific) Limited

Soo Chong Lim

Varun Ahuja

Daniel Fan

•Yang-Myung Hong

EMEA Credit Research
J.P. Morgan Securities Ltd.

Allison Bellows Tiernan, CFA

Anne-Marie Hendriks

Nachu Nachiappan, CFA

Zafar Nazim

Latin America Credit Research
J.P. Morgan Securities LLC

Table 1: Key 2011Forecasts
Spreads (STW bp) CEMBI Broad Composite CEMBI Broad Investment Grade CEMBI Broad High Yield Supply by sector (US$ millions) Total EM Corporates Asia Emerging Europe Latin America Middle East and Africa Quasi-sovereigns Investment Grade High Yield Default (% of HY Bond Stock) Total EM Corporates Asia Emerging Europe Latin America Middle East and Africa
Source: J.P. Morgan.


Isabela Bacchi

Alexandria Coari

Juliet Lim

Daniel Sensel

Global Index Research
Jarrad Linzie

See page 56 for analyst certification and important disclosures.
J.P. Morgan does and seeks to dobusiness with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

Warren Mar (1-212) 834-4274

Emerging Markets Corporate Research 01 December 2010...
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