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Public Fixed Income

EM Local Debt: Time to Shift the Perspective?

December, 2024 – 5 min read

EM local debt has historically offered higher yields than the comparable U.S. risk-free rate, and recently has begun to exhibit more stability as well—which presents a compelling case for investors.

U.S. Treasury rates are often referred to as “risk-free,” with Treasury yields serving as a benchmark against which other “risk” asset yields are measured. Recently, however, U.S. Treasury yields have become more volatile relative to both history and EM local debt yields, which begs the question: do investors need to shift their perspective regarding the “risk-free” rate?

While the answer to that question is perhaps broader than what we can cover in this piece, it does point to what has arguably become a very attractive environment for emerging market (EM) local debt.

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Dr. Ricardo Adrogué

Head of Global Sovereign Debt & Currencies

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