Emerging Market Debt Indicator April 2023

This month, Nicolas Jaquier and Christine Reed discuss the surprise cabinet reshuffle in Colombia and what it means for investors. As always, the wider EM Debt team provides an update across the rest of the universe.

15 May 2023

18 minutes

EMD Team

This edition includes:

  • Market background
  • Top-down views and outlook for the asset class
  • Focus article: Colombia - reshuffle does not spell disaster
  • Regional highlights and corporate credit market review
    Our EM debt experts summarise market developments across the sovereign debt universe in April and outline what’s taken place in the EM corporate credit market.

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The fast view

Market background

April was a calmer month for global financial markets. The lack of major newsflow allowed market participants to shift their focus back towards the US economic growth outlook and future path of interest rates. Against this more stable backdrop, EM fixed income and FX posted positive total returns.


The government in Egypt continued to face pressure regarding the lack of progress on its privatisation initiative, with S&P lowering the country’s outlook to negative from stable. Kenya continued to make progress on securing the required financing for 2023, with the IMF, African Export-Import Bank and the World Bank all looking to provide additional financing.


Strong economic data prints continued to emerge from China, but the recovery remains services driven so regional goods exporters such as South Korea and Taiwan are yet to see a rebound. Inflationary pressures have continued to moderate and surprise on the downside, with Indonesia, Thailand, South Korea, Malaysia, China, and the Philippines all boasting lower inflation.

Latin America

In Colombia, President Petro dealt a negative surprise to the market with a cabinet reshuffle, sacking his credible and prudent finance minister. Brazil recorded its largest current account surplus since June 2021, and inflation fell to its lowest level since January 2021. Headline inflation fell in Mexico, and central banks in Uruguay and Costa Rica cut interest rates.

Central and Eastern Europe

Although economic activity data was weak in Poland, there was a large improvement in the county’s current account balance, which moved from deficit to surplus in February. Hawkish comments from central bank members in the Czech Republic suggested that any potential easing of monetary policy may take place later than what the market is currently pricing.

Rest of Europe, Middle East and Africa (EMEA)

Moody’s downgraded Israel’s outlook to stable, citing governance concerns relating to the government’s proposed judicial reform. In South Africa, power outages continue to weigh on the economic outlook, while important export sectors are seeing lower volumes.

EM corporate debt highlights

The EM corporate debt market (JP Morgan CEMBI) returned +0.88% over April, with moves in spreads and underlying Treasuries both driving the total return figure. While spreads tightened modestly at the overall index level, there was a divergence in spread performance between high-yield and investment-grade (IG) issuers, with spreads widening slightly in the former and tightening in the latter.

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
Emerging Perspectives - latest insights

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