Emerging Market Debt Indicator June 2023

Thys Louw explores the implications for debt investors as Nigeria’s new administration takes aim at two of the economy’s key challenges. The wider EM Debt team also provides an update across the rest of the universe.

5 Jul 2023

5 minutes

EMD Team

This edition includes:

  • Market background
  • Top-down views and outlook for the asset class
  • Focus article: A new era for Nigeria
  • Regional highlights and corporate credit market review
    Our EM debt experts summarise market developments across the sovereign debt universe in June and outline what’s taken place in the EM corporate credit market.

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The fast view

Market background

June started on a positive note, with the conclusion of the US debt ceiling deal after weeks of uncertainty. Subsequently, stubborn inflation surprises prompted rate rises across many developed markets. In contrast, inflation continued to moderate in many emerging markets. EM fixed income markets performed well, boosted by some positive country-level developments.


Ghana made further progress on its local debt restructuring. Zambia reached an agreement with the official creditor committee on its debt restructuring; this paves the way for a deal with private creditors and releases IMF funds, which had been withheld in the absence of a deal.


Inflation continued to decline, with most central banks across the region having now generally paused their rate hiking cycles. In China, economic data releases remained somewhat disappointing, prompting authorities to announce some monetary policy easing measures. Pakistan eventually agreed to a US$3 billion Stand-By Arrangement with the IMF, a positive surprise which helped the country’s hard currency bonds to trade well.

Latin America

In Brazil, headline inflation continued to show signs of easing, which proved to be a common feature across Latin America. Chile's central bank kept rates on hold and signalled that it will soon start to cut rates, sparking a bond market rally. Colombian assets performed well as market participants priced in a lower chance of fiscally concerning reforms being passed through Congress.

Central and Eastern Europe

Industrial production and retail sales continued to disappoint across Poland, the Czech Republic, and Hungary, with the tightening in financial conditions starting to bite. Against this backdrop, inflation continued to print lower than expected overall, led by easing food, energy and core prices.

Rest of Europe, Middle East and Africa (EMEA)

In Israel, political headlines continued to impact local asset prices, with unrest related to the government's judicial reform agenda rumbling on. In Turkey, newly elected President Erdogan allayed market fears by appointing more orthodox policymakers. However, the central bank dashed hopes somewhat after only hiking the policy rate to 15%.

EM corporate debt highlights

The EM corporate debt market broadly kept pace with its developed market counterparts over June. Within the index, high-yield issuers materially outperformed investment-grade bonds. Although both areas of the market saw credit spreads tighten, high-yield spreads contracted more aggressively.

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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