Distressed Emerging Market Debt (EMD) may have been ignored for too long. That may be changing as double digit performance expectations materialise.
Double Digit Time?
Like CCC securities in the corporate high yield space, distressed Emerging Market Sovereign debt is often an overlooked segment of the asset class. But possibly for the wrong reasons.
The simplistic view is that buying distressed debt has the risk of default that results in the investor receiving zero. In practice, between default and zero lies the restructuring story. Which whilst often anticipated and complex, pairs a risk with a potentially high reward.
Factor in haircut calculus, historical recovery values averaging 50%, and deep discount purchases from forced sellers, the ability to generate double digit returns by experienced distressed debt asset managers has not gone unnoticed by the professional investor community. Nor have the opportunities that exist in today's Emerging Market Debt environment.
Emerging Market Debt
EMD Hard Currency Grabs Investors Attention
Lots To Digest On EM Hard Currency Bonds
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Why Is EMD Local Outperforming Hard Currency Bonds?
EMD Back On Investors Radar.



What is the Outlook for Emerging Market Debt?
The Good News Is Twofold

Emerging Market Debt, like the entire fixed income asset class, has had a tough start to 2022.
Even hard currency bonds, as represented by the JP Morgan EMBI Global Diversified Index, have seen YTD returns not experienced since 1995. With 1Q22 completing four consecutive negative quarters - an occurrence which has only happened 3 times since 1993.
The good news is twofold.
EMD Winners & Losers
The Regional View

What to Expect from Russia & Ukraine Bonds?
ONE TO WATCH
