As interest rates begin to tighten in many parts of the developed world, fixed-income investors may be concerned about their portfolios’ exposure to interest-rate risk. Oftentimes, they may be better off than they realize, particularly if they have an allocation to emerging-markets debt.
Opportunities existing in emerging-markets debt today are attractive because of their idiosyncratic characteristics and lower correlations to debt issued in developed markets. In this paper, we will look at different types of debt and issuers, focusing on what makes them unique and worth the investment. We will focus on opportunities in two regions – Asia and the Americas – and also provide a look at the positive changes taking place in the asset class as a whole.