Emerging Market Debt Indicator November 2022

Following a very strong month for EM debt markets, Grant Webster discusses receding tail risks and a possible tipping point for the asset class.

9 Dec 2022

18 minutes

EMD Team

This edition includes:

  • Market background
  • Top-down views and outlook for the asset class
  • Focus article: Receding tail risks: a tipping point for EM debt?
  • Regional highlights and corporate credit market review
    Our EM debt experts summarise market developments across the sovereign debt universe in November and outline what’s taken place in the EM corporate credit market.

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The fast view

Market background

November was a very strong month for risk assets. Investor sentiment was boosted by the lower-than-expected consumer price index (CPI) inflation print in the US, and the resultant drop in US Treasury yields provided a further boost to EM bond markets.


Coinciding with an IMF visit to the country, Ghana has launched a debt restructuring process, starting with local debt. Angola’s minister of finance said the country does not need new IMF financing and instead is likely to tap into international financial institutions to fund budget spending and projects.


The main positive drivers of markets in the region included the significant easing of US financial conditions post the lower US inflation print, optimism regarding China’s COVID policy, and increasing support for China’s real estate sector.

Latin America

Given the region’s close ties with the US, bond markets benefitted from the apparent Fed pivot following the lower-than-expected US CPI inflation print. Within the region, Brazil’s inflation data was more mixed following several months of disinflation, while Chile’s inflation print was lower than expected.

Central and Eastern Europe

The inflationary outlook for the region improved modestly over the month, with inflation in the Czech Republic, Romania and Poland falling in year-on-year terms. Hungary remains a weak link given the ongoing large twin deficit and the continuing rule-of-law dispute with the EU.

Rest of Europe, Middle East and Africa (EMEA)

Turkey’s economy continues to face headwinds of incredibly high inflation and a large current account deficit on the back of higher energy prices. Ukraine’s government has entered an agreement with the IMF which could evolve into a full IMF support programme in 2023.

EM corporate debt highlights

Like other risk assets, November was very strong for EM corporate debt returns. The overall asset class was lifted by two key themes; improved risk sentiment post the lower-than-expected US CPI print, and optimism around China’s change in stance on its COVID policy.

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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