Credit

Aaron Grehan and Nafez Zouk from our emerging market debt team explain how the asset class is standing up to some significant headwinds.

The economic fallout from the pandemic has left several poorer nations struggling to repay debt. China, the biggest single creditor to many, could carry considerable clout in negotiations. Zambia will prove an early test case, argues Carmen Altenkirch.

In this month’s instalment of our visual series on topical themes, we look at key trends in the credit market.

More than one fifth of the world’s largest listed companies have committed to net-zero targets, but few have detailed roadmaps to get there. Mirza Baig considers the challenges for investors managing transition pathways.

We are back in an old, but unfamiliar market regime. In a period where simple playbooks may falter, Jeremy Albers sets out why portfolio construction can make the difference.

We assess the near and longer-term implications of Russia’s invasion of Ukraine on emerging-market debt.

Bondholders are starting to use their power to influence corporate behaviour in areas such as climate change, social inequality and biodiversity loss.

Emerging market assets have underperformed developed market peers over the past decade. While this has led to valuation gaps, selectivity will be critical, argues David Nowakowski.

Investor influence has long been confined to that of equity shareholders. Yet bondholders wield a lot of power. Can they harness it for positive change?

After decades of low returns on research and development (R&D), the healthcare sector is producing a slew of innovations, from drugs to diagnostics. But with many coming from new entrants, will big pharmaceutical companies manage to keep up with the times?

Governments around the world are struggling to avert a climate catastrophe. Regardless of whether they succeed, climate change threatens adverse consequences for government bonds, although market impacts are likely to vary.

Credit is an asymmetric asset class. The upside is a coupon payment and limited capital appreciation; the downside is a default to zero. For all maturities and bond types, ESG integration can play a crucial role in mitigating risk.

Trend rates of economic growth, which have been on the decline for decades in the world’s leading economies, look set to fall further. That will have big implications for governments, companies, households and investors, argues Stewart Robertson.

Relatively low vaccination rates, slowing Chinese growth, and terms of trade gains that may have largely peaked mean emerging market economies face several headwinds in 2022. Varying degrees of resilience and vulnerability are likely to result, argue Nafez Zouk and Carmen Altenkirch.

The International Monetary Fund (IMF) annual meetings are always a chance to reflect on the key trends affecting emerging markets. This year was no different. Carmen Altenkirch and Nafez Zouk engaged with policymakers and delegates to ascertain the real impact of the COVID pandemic on growth, fiscal metrics, and debt burdens.

Investors in China should view recent interventions by the government in the context of its history and longer-term strategic ambitions, argues Amy Kam.