Investors in emerging-market debt are reducing positions in the riskiest segments as US Treasury yields climb and global credit conditions deteriorate. Multiple asset managers are trimming exposure amid a selloff that threatens to interrupt a recent period of gains in developing-world bonds.
The selloff is unfolding while credit spreads remain tight by historical standards, which some managers view as a warning sign if higher-for-longer interest rates pressure risk assets. Dollar-denominated emerging-market debt is still modestly positive over the past year, even as US yields reach levels not seen in roughly two decades.
Outlets highlight the same broad dynamic—rising US yields raising concerns for credit—and the same shifts in strategy. One cited manager says opportunities in the riskiest corner of the market are “hard to find,” and has lowered exposure to Colombia while increasing holdings in higher-rated credits such as Indonesia and the Philippines. The reporting frames these moves as precautionary rather than a total retreat from emerging-market debt.
