Emerging Market Debt Indicator March 2023

Catch up on developments across the EM debt universe and read the key takeaways from a recent investor workshop – where our investment experts shared insights into what’s most relevant for investors in EM debt.

Apr 12, 2023

20 minutes

EMD Team

This edition includes:

  • Market background
  • Top-down views and outlook for the asset class
  • Focus article: EM Perspectives - takeaways from our annual seminar, exploring the topics that are most relevant for investors in EM debt today
  • Regional highlights and corporate credit market review
    Our EM debt experts summarise market developments across the sovereign debt universe in March and outline what’s taken place in the EM corporate credit market.

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The fast view

Market background

The collapse of Silicon Valley Bank and events surrounding the UBS takeover of Credit Suisse made for a volatile month as investors digested the potential implications of both. Against this backdrop, EM fixed income and currency markets held up well, with all sub-asset classes posting positive returns.


The IMF executive board approved a new US$5 billion flexible credit line for Morocco. Ghana’s government passed the key tax bills required to get its IMF deal finalised. Elsewhere, Angola’s economy finally put its five-year long recession behind it – growing by 3.0% in 2022.


The theme of strong service sector activity (boosted by China reopening) and a more subdued manufacturing sector continued. Positive surprises included lower-than-expected inflation in the region and improving data on China’s property market - new home sales returned to pre-COVID levels.

Latin America

Inflation continued to fall in much of the region. In Brazil, President Lula’s fiscal framework was more conservative than expected, allaying market fears. Political risk continued to abate in Peru, but increased uncertainty sparked a sell-off in Ecuador, as a greater possibility of impeachment increased the likelihood of President Lasso calling early elections, dissolving Congress and ruling by decree.

Central and Eastern Europe

While hard economic growth data across the region has generally disappointed, soft data (e.g., consumer and business confidence) continued to recover. Inflation has generally fallen, albeit not always in-line with expectations. Markets welcomed news that Montenegro’s president (incumbent for 30 years) lost the election to a pro-EU former investment banker.

Rest of Europe, Middle East and Africa (EMEA)

Ahead of the May election and facing a stronger opposition, Turkey’s President Erdogan gave more fiscal handouts. Turkey’s external position remains fragile given the large current account deficit and falling usable foreign exchange reserves. In Ukraine, the IMF reached a staff-level agreement for a US$16 billion credit facility. Governance and political risk continued to weigh on Israeli assets.

EM corporate debt highlights

Global macro headlines overshadowed EM corporate developments and drove market moves, but against this backdrop the asset class held up well. While the risk-off shift in sentiment and fears of banking sector contagion caused spreads to widen meaningfully across both high-yield and investment-grade issuers, the rally in US Treasuries helped to offset this.

General risks. All investments carry the risk of capital loss. The value of investments, and any income generated from them, can fall as well as rise and will be affected by changes in interest rates, currency fluctuations, general market conditions and other political, social and economic developments, as well as by specific matters relating to the assets in which the investment strategy invests. If any currency differs from the investor’s home currency, returns may increase or decrease as a result of currency fluctuations. Past performance is not a reliable indicator of future results. Environmental, social or governance related risk events or factors, if they occur, could cause a negative impact on the value of investments.

Specific risks. Emerging market: These markets carry a higher risk of financial loss than more developed markets as they may have less developed legal, political, economic or other systems.

Authored by

EMD Team

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All the information in is believed to be reliable but may be inaccurate or incomplete. The views are those of the contributor at the time of publication and do not necessary reflect those of Ninety One.

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