Junk-Bond Craze in Emerging Markets Is Strongest in Eight Years

Global investors are favoring junk-rated bonds over investment-grade debt in emerging markets by the widest margin in eight years, as the winding down of the Iran war revives the hunt for yield.

A rally in bonds triggered by the ceasefire has compressed the risk premium on emerging-market high-yield debt over US Treasuries faster than the equivalent spread for investment-grade sovereigns. That has narrowed the gap between the two spreads to 311 basis points, the tightest since May 2018, according to JPMorgan Chase & Co. data.