Emerging-Market Risk Spread Falls to Lowest Level Since Covid Surge
- High-yield bonds drive spread compression over Treasuries
- Bonds from Lebanon, Argentina outperform peers amid turnaround
Lebanese bonds alone have generated total returns of 156%, as the country’s leaders overcame disputes and formed a functional government.
Photographer: Anwar Amro/AFP/Getty ImagesThis article is for subscribers only.
The craze for junk-rated debt of some of the world’s riskiest countries has sent an emerging-market risk premium to the lowest level since before the Covid shock five years ago.
The additional yield investors demand to own EM sovereign dollar bonds over US Treasuries narrowed to 314 basis points, data from JPMorgan Chase & Co. show. That’s the tightest spread since February 2020, a month before a surge in Covid-19 cases caused a global selloff and a bout of debt defaults.