Political risk product protects investors in emerging markets. (Loss/Risk Management Notes Property/Casualty).Although emerging markets are considered attractive by investors because of the potential for high return, there is a great deal of risk involved. The uncertain political and economic climates--including the value of the currency, stocks and bonds--can change suddenly. Sovereign Risk Sovereign Risk The risk that a foreign central bank will alter its foreign-exchange regulations thereby significantly reducing or completely nulling the value of foreign-exchange contracts. Insurance Ltd. offers a product to mitigate the risk of currency devaluations Currency devaluation A deliberate downward adjustment in the official exchange rates established, or pegged, by a government against a specified standard, such as another currency or gold. that could hinder hin·der 1 v. hin·dered, hin·der·ing, hin·ders v.tr. 1. To be or get in the way of. 2. To obstruct or delay the progress of. v.intr. investors in projects in emerging markets from paying debts for investments. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Sovereign's Emerging Markets Directory, a country doesn't have to be small or poor to be an emerging market. China and India, for example, are included in the category. Other leading emerging markets include Israel, Egypt, Morocco and Peru. Sovereign's product is designed for projects that are located in certain emerging markets and have dollar-denominated debt with local currency revenues indexed to inflation. The coverage is triggered if inflation-adjusted exchange rates move beyond a predetermined pre·de·ter·mine v. pre·de·ter·mined, pre·de·ter·min·ing, pre·de·ter·mines v.tr. 1. To determine, decide, or establish in advance: band and make it impossible for a project to meet its debt payments. |
|
||||||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion