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EM debt refinancing post Covid-19

While some countries are suffering acute stress, we see the broad emerging market debt universe as free from systemic risk as a result of Covid-19 fallout. We scrutinise the credit standing across the universe to set the picture straight on the refinancing landscape.

The global slowdown brought on by Covid-19 has led to a dramatic repricing of financial assets globally, with emerging market (EM) debt being hit particularly hard.

During this time, investors have questioned whether the sharp growth slowdown and the reversal of capital flows out of EM countries will leave these credits in a precarious position, possibly leading to a wave of defaults and debt restructurings.

While there are new vulnerabilities that need to be addressed, our observation is that broad investor sentiment appears to have been indiscriminately negative with respect to the EM outlook – not helped by media headlines painting all EM countries with the same brushstroke.

Our findings are more nuanced than many investors may have anticipated following thorough bottom-up analysis to scrutinise the credit standing of sovereigns and corporates across the EM universe.

In our latest insight, we examine:

  • The differentiated impact of Covid-19 on the EM hard currency sovereign universe

  • Access to financing by ratings categories

  • Sources of funding

  • Vulnerabilities

Download the PDF