Emerging markets have outperformed global credit markets since the turmoil began in August. But the bet that the asset class will continue to be a safe haven seems shakier by the day.
The spread for the benchmark JPMorgan Emerging Markets Bond Index Plus has widened out to its highest level in several years, hovering around 300 basis points over US Treasuries. Admittedly, what is happening to the Embi+ is less important than it once was. External debt markets are shrinking and account for less than 20% of total debt outstanding in the emerging markets universe, according to the Bank for International Settlements.
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