Emerging markets debt – past, present and future
Webinar: Watch the full replay below and explore what's next
On 9 October 2025, we held a webinar featuring Shamaila Khan, Head of Global Emerging Markets and Asia-Pacific Fixed Income, and Massimiliano Castelli, Head Global Sovereign Markets Strategy and Advice where they unpacked the evolution of emerging markets debt and explored what lies ahead.
From the growth of sovereign and corporate hard-currency bonds to the development of local currency capital markets and secular shifts in credit dynamics, our experts shared insights on performance drivers, valuation trends, and macro forces shaping emerging markets debt today.
10 key highlights from the discussion:
10 key highlights from the discussion:
- The emerging markets debt asset class has transformed into a diverse and resilient investment opportunity, representing a significant portion of global fixed income markets.
- Offering both size and diversity, emerging markets debt has over USD 4 trillion in hard currency bonds and USD 13 trillion in local currency debt outstanding, surpassing the US and euro high-yield markets.
- Most investors find emerging markets debt attractive due to strong fundamentals and interest in diversifying away from US based assets.
- Recent years have shown notable improvements in emerging market fundamentals, including declining default rates and more credit rating upgrades than downgrades.
- Emerging markets debt has shown resilience through global shocks such as the COVID-19 pandemic, inflation, and trade tensions, with many countries demonstrating increasing macroeconomic maturity.
- Emerging markets debt remains relatively inexpensive compared to other global fixed income assets, attracting strong demand and crossover flows from global investors.
- High-yield sovereigns and corporates, particularly in frontier markets has delivered strong performance, with pockets of value found across regions.
- The complexity and diversity of emerging markets necessitates dedicated research and active management to identify value and effectively manage risks.
- Emerging markets debt is increasingly seen as a strategic allocation for global investors, providing diversification benefits and attractive risk-adjusted returns.
- Despite regulatory constraints, insurance companies and institutions are expanding their exposure to investment-grade emerging markets debt, drawn by its higher quality and higher historical returns relative to developed markets investment-grade credit.
Watch the webinar below.
To dive deeper into the evolving dynamics of this topic, explore our latest research.
To dive deeper into the evolving dynamics of this topic, explore our latest research.
