Emerging Debt Outlook: Attractive Opportunities in Local Currencies Amid Rising Risks

The featured report, prepared by GMO’s Emerging Country Debt team, offers a Q1 2025 valuation update on emerging market debt and a scenario analysis of tariff impacts.

• Hard Currency Debt: Credit spreads are assessed as neutral+, with moderate risk of widening under stress scenarios driven by tariff-related shocks.

• Local Currency Debt: Both EMFX and local interest rates are rated very attractive, with potential for strong returns relative to U.S. assets.

• Tariff Impact: Stress tests reveal heightened vulnerability among certain sovereign issuers, yet local debt valuations remain resilient.

Dive into the full report for a detailed breakdown of valuation metrics, scenario analysis, and strategic positioning insights.