Emerging Market Debt Indicator January 2023

Following a recent trip to Africa, Thys Louw shares his observations on this increasingly diverse opportunity set. In addition, the wider investment team provides an update across the EM debt universe.

Feb 14, 2023

18 minutes

EMD Team

This edition includes:

  • Market background
  • Top-down views and outlook for the asset class
  • Focus article: Notes from the road: Africa
  • Regional highlights and corporate credit market review
    Our EM debt experts summarise market developments across the sovereign debt universe in January and outline what’s taken place in the EM corporate credit market.

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The fast view

Market background

Risk assets, including EM fixed income, enjoyed a strong start to 2023. In the US, inflationary pressure continued to ease, with January’s CPI print falling for a sixth consecutive month, boosting investor sentiment.


The central bank in Angola cut rates by 150bps as inflation has finally fallen. In Ghana, the government continued to make progress on the domestic debt exchange, which should boost the country’s chances of securing an IMF deal. In Egypt, on the back of the approval of the IMF programme, the country continued with the process of liberalising its exchange rate.


Asian markets rallied, largely driven by China reopening its economy and relaxing its COVID policies. Sentiment further improved after Chinese authorities announced they would take measures to help boost market confidence and increase support for manufacturers and small companies. India’s PMI data pointed to better-than-expected manufacturing and services activity.

Latin America

In Brazil, President Lula da Silva was sworn into office and subsequent local unrest was short-lived. Protests against President Boluarte continued in Peru and led to a large copper mine suspending operations. In Chile, economic data was better than expected overall. Argentina surprised the market by announcing plans to start buying back bonds, leading to a strong rally in hard currency debt.

Central and Eastern Europe

Energy prices continued to moderate in Europe, especially gas prices, helping the disinflationary process in the region. Despite this, central banks in the region, particularly in the Czech Republic and Hungary, sounded reasonably hawkish overall in their forward guidance.

Rest of Europe, Middle East and Africa (EMEA)

Plans by Israel’s ruling coalition to reduce judicial oversight of the government sparked protests and warnings from credit rating agencies. In South Africa, the reserve bank raised the policy rate by 25bps. While the rate hike was lower than expected, the accompanying statement was hawkish.

EM corporate debt highlights

EM corporate debt also enjoyed a strong start to 2023, with high-yield markets outperforming investment-grade rated debt. While IG assets were larger beneficiaries of the fall in US Treasury yields, credit spreads widened slightly; in contrast, high-yield markets saw spreads tighten meaningfully against the improved backdrop for risk assets.

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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This communication is provided for general information only should not be construed as advice.

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.

Any opinions stated are honestly held but are not guaranteed and should not be relied upon.

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