Arkaim Advisors' $470 million Emerging Markets Corporate High Yield Debt Fund has racked up a 12% return this year, beating 99% of its peers, by focusing on debt from Ukrainian companies, according to Bloomberg data.
The UK-based firm, which specializes in acquiring debt of health companies in distressed countries, led its peers by holding debt from Ukraine's state-owned Naftogaz, which returns 73% this year, Ukrainian Railways, which has returned 52%, and Metinvest, which has returned 19%.
Since May, Ukraine has been the biggest allocation of the fund, at more than 10%, Chief Investment Officer Dimitry Griko told Bloomberg in an interview. Until then, Argentina, with its corporate and provincial credits, was the largest allocation.
Naftogaz, the state oil and gas company, restructured its debts and has received €500 million in loans and grants from the European Bank for Reconstruction and Development and the government of Norway.
Miner Metinvest has been using spare cash to buy back its bonds and Ukrainian Railways has a payment standstill agreement through January 2025.
Companies such as Arkaim Advisors often focus on healthy companies in distressed countries, as they often have assets in other countries and revenue in hard foreign currencies, according to the report.
