ETF Buys Emerging-Market Sovereign Debt (PCY, EMB)

NEW YORK (TheStreet) -- Sovereign debt has earned a bad name this year, with Greece's budget crisis spreading to other parts of Europe. Those concerns have helped drag down the U.S. stock market. But there are emerging-market countries whose debt and budget situations are on much firmer footing. For interested investors, there are two exchange traded funds that buy emerging-market sovereign debt. The PowerShares Emerging Markets Sovereign Debt Portfolio

has been for sale for two and half years and has attracted $590 million in assets. Its holdings' effective duration is just under eight years. Forty-five percent of the ETF is rated BBB and 27% rated BB, and it yields about 6%. There is little single-country risk, with Indonesia and the Philippines being the largest positions, at 5%. Countries in the fund that usually don't get a lot of attention include Uruguay and Bulgaria. The iShares JP Morgan USD Emerging Markets Bond Fund

has been trading almost as long as the PowerShares ETF but is much larger, at $1.4 billion in assets. Its effective duration is seven years. Twenty-two percent of the fund is rated BBB-plus, 12% is BBB-minus and 11% is BB-minus. It yields 5%. The iShares fund makes larger country bets, with 9% each to Russia and Brazil, and 8% each to Turkey and Mexico. At their lows, both emerging-market bond ETFs were down 40%, but that was around the time of the Lehman Bros. collapse. Both have since returned to their respective highs from before the bear market for equities started. To read the rest of this story,

.