2025 Market View: Emerging Markets Debt

Nov 28, 2024

Polina Kurdyavko, Head of BlueBay Emerging Markets, Senior Portfolio Manager shares her thoughts on 2024 and the year ahead.

  • EM Sovereign credits generally have lower debt and gross financing needs compared to developed markets countries, and credit rating trends are likely to remain positive in the coming year. EM Corporate credits have also seen material deleveraging over recent years. With net leverage at historical lows and ongoing improvement in debt ratios, corporate default rates are also expected to be low.
  • Despite stronger fundamental metrics, EM asset offer a yield and spread pick-up compared to their developed market peers with equivalent credit ratings. EM Central Banks are well positioned to continue easing, providing attractive opportunities in local rates.
  • The asset class remains underinvested, making it less vulnerable to volatility from outflows.
  • Geopolitics: while US foreign policy could great volatility, possible resolution of current conflicts could stabilise global markets, improve sentiment and benefit Emerging economies in particular. Countries with friendlier relations with the Trump administration, such as Argentina, El Salvador and Russia could be winners.
  • Trade: a shift in global supply chains could present opportunities for some countries in the form of FDI and trade rerouting and, likewise, a Chinese move away from US imports could benefit EM exporters. Countries with domestic growth and reform stories, such as India and South Africa would be more resilient in the face of global trade repositioning.
  • Commodities: higher production of US domestic oil and natural gas and possible easing of Russia sanctions could result in weaker oil prices. The stance on trade and infrastructure investment could drive demand for industrial metals.


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