William Blair
April 14, 2020
Active Never Rests™

EM Debt: Looking Through the Challenges

EM Debt: Looking Through the Challenges

Investors are reassessing their portfolios and asset allocation due to the uncertainty created by COVID-19 and its potential impact on both the global economy and prices. At this time of rising uncertainty and heightened volatility, we share our latest thoughts on investment opportunities across emerging markets (EM) sovereign debt and how we seek to capture them.

Fundamentals Under Pressure But Support Up

The fundamental landscape in emerging markets has deteriorated sharply as the global economy prepares to dive into an economic recession, and we have concerns about the ability of policymakers in EMs to both contain COVID-19 and manage its resulting socioeconomic implications.

While there are encouraging signs from a policy response perspective (fiscal and monetary, macro and micro), the magnitude of the potential impact on EM credit metrics remains an open question.

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