On August 16, 2017 Reuters reported that several investors are shying away from exposure to Venezuelan bonds due to the economic and socio-political situation in the country, which raises default as well as reputation risk. The article explains that BlueBay Asset Management, Credit Suisse and Standard Life Investments have all either reduced their exposure to Venezuela already or are currently reviewing it.
According to the article, “(s)creening sovereign debt for environmental, social and governance reasons — known as ESG — is in its infancy compared with well-established practice in equity investment.”
Yet the article notes that this niche is growing, with dedicated ESG bond funds, integration of ESG issues into credit scores and academic-industry research demonstrating a correlation between improving political risk in emerging market countries and bond outperformance.
You may read the article on the Reuters internet site.