Emerging market debt in 2025: balancing opportunities and risks

In 2025, emerging market debt presents a nuanced landscape for investors. Moderating inflation, improving economic growth, and easing monetary policies contribute to a favourable macroeconomic environment. Notably, default rates for emerging market high-yield corporate bonds are projected to fall to 2.7%, the lowest level since 2019, while sovereign high-yield defaults are expected to be less than 1%. However, potential risks include increased tariffs under the new U.S. administration and the strength of the US dollar, which could impact countries differently based on their trade dynamics....