Market slump disrupts EM junk debt rally

Global markets have been whipsawed in recent weeks by US tariff shifts and rising recession fears

- Bloomberg

A plunge in global risk appetite is pushing emerging-market investors into higher-quality dollar bonds, signaling a years-long rally in junk debt from developing nations might be at an end. Money managers from Pinebridge Investments and T. Rowe Price to TCW Group are scooping up sovereign notes from countries including Mexico, South Africa and Colombia, touting their high liquidity, market access and fair valuation. Names rated around BB and BBB, they say, are well-positioned to benefit from falling US Treasury yields and withstand persistently high borrowing costs that may impact their riskier peers.