The fast view
- Uncertainty around macro themes, including Chinese policy, drove EM corporate debt market volatility in 2021. Yet the overall market has shown resilience.
- In 2022, investors will face uncertainty around inflation and interest rates. EM corporate debt is generally well placed in a rising-rates environment.
- Company fundamentals in EM continue to strengthen and leverage metrics have fallen back. Many companies will enter 2022 on very firm foundations.
- Political risk – particularly in Latin America – is largely already priced in, creating attractive valuations and relative-value opportunities.
- We see significant opportunities in China, as fears of a recession seem overblown and policy loosening already looks set to help mitigate macro headwinds.