The What-Why-When-How Guide To Owning Emerging Debt

To make a strategic allocation to any risky fixed income asset, you must expect that it will deliver excess returns over your USD duration hurdle (USD cash or USD duration of some tenor), that is, it must offer value. For risky credit markets like hard currency EMD or U.S. corporate high yield, this boils down to a view that the credit spread offered is higher than your estimate of future losses due to default.