Report published August 17, 2026
Emerging Market Bond Top List and Themes: Carry Remains Attractive
Source and citation context
- Issuer
- UBS
- Report date
- August 17, 2026
- Analysis as of
- August 17, 2026
Authors / editors: Tatiana Boroditskaya (Analyst), Santosh Bukitgar (Analyst), Emre Tekmen (Analyst), Devinda Paranathanthri (Analyst), Joel Tan (Analyst)
Finvaulta summarizes UBS's analysis. Attribute opinions, forecasts, time-sensitive values, and chronology to the issuer and report date; do not treat this page as an independent verification or a current market-data source.
UBS CIO maintains an Attractive stance on emerging market credit, citing appealing carry well above developed market cash rates. With spreads near historical tights, investors should focus on income carry, quality short- and medium-term tenors, and selective high yield or subordinated debt.
Key Takeaways
- 1.UBS maintains an Attractive stance on EM credit, driven predominantly by high interest rate carry relative to cash rates in advanced economies.
- 2.EM fundamentals and technicals remain strong with low leverage, high FX reserves, 0 sovereign defaults in 2025, and record supply smoothly absorbed.
- 3.With spreads trading near historical tights, upside via compression is limited; investors should prioritize carry, quality short-to-medium tenors, and selective high yield/subordinated debt.
Table of Contents
- Fed, US inflation, and geopolitics remain key uncertainties
- Fundamentals and technicals remain supportive
- Carry first, spread compression second
- Asia credit remains resilient as higher yields support a balanced risk–return profile
- Changes to our bond selection in Emerging Market Top List and theme
- Restrictions for EEA-domiciled clients
- Opportunities in sukuk
- Opportunities in EUR-denominated bonds
- Opportunities in short- and medium-term bonds
- 12 month rating history
- UBS CIO risk views
- UBS CIO valuation views
- Sell recommendations
- Issuer valuation views
- Required Disclosures
- Producers, disseminators and their competent authorities
- Frequency of updates
- Statement of Risk
- Emerging Market Investments
- Risk Information
Report data
Table 1 - CIO EM bond investment lists — as of August 17, 2026.
| Metric | Estimate | Context |
|---|---|---|
| JPMorgan EMBI Global Diversified Index YTD Total Return | 2.84% | EM hard-currency sovereign benchmark return driven by carry and spread tightening. |
| JPMorgan EMBI Global Diversified Index Yield | 7.15% | Current index yield after widening 34bps since end-2025. |
| Gross EM Bond Issuance 1H26 | 450 USD billion | Record gross issuance absorbed comfortably by strong investor demand. |
| EM High Yield Corporate Default Rate Forecast | 3% | Forecast default rate broadly in line with US high yield. |
| US 10-Year Treasury Yield | 4.696% | Ended 14 August around 4.696% after reaching 4.745% on 31 July. |
Reports in this series
Emerging Market Bond Top List and Themes is shown in chronological order through this edition, published on August 17, 2026.
Part of the Emerging Market Bond Top List and Themes series — view all 4 editions
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Authors / Editors
Reported Data Context
- JPMorgan EMBI Global Diversified Index YTD Total Return: 2.84 % (YTD 2026) · Source: JPMorgan / UBS
- JPMorgan EMBI Global Diversified Index Yield: 7.15 % (As of 17 August 2026) · Source: JPMorgan / UBS
- Gross EM Bond Issuance 1H26: 450 USD billion (1H 2026) · Source: UBS
- EM High Yield Corporate Default Rate Forecast: 3 % (FY 2026) · Source: UBS
- US 10-Year Treasury Yield: 4.696 % (As of 14 August 2026) · Source: UBS