Adding Income Through Emerging Market Bonds

UBS CIO identifies emerging market hard currency debt as an attractive investment with yields exceeding 6% and high-single-digit return forecasts. Stronger fundamentals and resilient performance during recent geopolitical stress support a constructive tactical view.

Key Takeaways

• 1.UBS CIO rates emerging market (EM) hard currency debt as 'Attractive' due to elevated yields and strong fundamentals.
• 2.EM fundamentals are currently stronger than in previous cycles, characterized by higher FX reserves and improved current-account positions.
• 3.Yields on EM debt (above 6%) provide a significant cushion against volatility compared to developed market investment grade bonds.

Table of Contents

• Why look now?
• Where next for yields and spreads?
• How to invest?
• Global asset class preferences definitions
• Appendix
• Risk Information

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