Emerging perspectives

Emerging Market Debt Indicator June 2021

This month, we examine the key developments in the hard currency debt market over the last decade and what these mean for investors. As always, we also highlight recent regional developments and provide an updated outlook across the EM debt universe.

Jul 13, 2021

22 minutes

EMD Team
This month, we examine the key developments in the hard currency debt market over the last decade and what these mean for investors. As always, we also highlight recent regional developments and provide an updated outlook across the EM debt universe.

This edition includes:

  • Market background
  • Top-down views and outlook
  • Insights from the team
    • Revisiting EM hard currency debt
      Portfolio manager Thys Louw discusses the transformation of the hard currency debt market over the last decade, and what this means for investors today.
  • Regional highlights
    • Our EM Debt experts summarise June’s market developments across the EM sovereign debt universe.

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The fast view

Market Background

  • The JP Morgan GBI-EM Global Diversified Unhedged Index produced a total return of -1.2% in US dollar terms, while the JP Morgan EM Bond Index returned 0.7%.
  • The US Federal Reserve turned brought forward its timeframe for raising interest rates. After a short bout of volatility, US Treasury 10-year bonds rallied back.


  • The IMF approved the final review of Egypt’s reform programme under the 12-month Stand-By-Arrangement, allowing the release of US$1.7 billion. It also approved a US$1 billion Extended Credit Facility programme for Uganda, providing support for its third National Development Plan.
  • Kenya reported the first outperformance of revenue targets since FY13/14 as tax collections beat estimates thanks to the economic recovery and the reintroduction of various taxes.


  • The COVID situation remains mixed across the continent, with Indonesia, Malaysia and Thailand struggling with recent outbreaks but India and Taiwan posting a dramatic fall in cases.
  • The theme of strong exports reflecting the growing global demand remains in play across the region. But economic data from China was disappointing and a weak tourism sector is weighing on Thailand.

Latin America

  • There has been a strong upswing in economic data across the board in Latin America, with the exception of Colombia.
  • Political uncertainty continued to weigh on Peruvian assets. In contrast, Argentina reached an agreement with the Paris Club to postpone its debt repayments.


  • Economic activity data continued to strengthen, PMI data was strong in Poland and rising in the Czech Republic. Various central banks raised interest rates, including the Czech Republic and Hungary.
  • Serbia has been added to the JP Morgan GBI-EM index, so Serbian bonds should benefit from passive investor inflows.

Rest of EMEA

  • On COVID, both the Russian and South African governments have had to enforce further restrictions given the rise in Delta variant cases and the low levels of vaccinations. Turkey has sped up its vaccination rate which bodes well for tourism flows.
  • US President Biden met with President Putin in Geneva, which was viewed by many as a constructive development. The high oil price is boosting the country’s balance of payments.


Authored by

EMD Team

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