Rising US Rates Pummel Emerging Markets; Defaults Loom as Debt Loads Become Unmanageable

Many emerging market countries have sovereign dollar debt trading at distressed levels as US Treasury yields rise.

Ethiopia, Tunisia, Pakistan, Argentina, Bolivia and Egypt seen as most at risk of default.

Refinancing debt is increasingly unaffordable for emerging markets with junk bond yields around 12%.

Bond issuance has dried up showing lack of demand. Repaying debt harder with weaker currencies.

Investor mood bleak with $23 billion in EM debt fund withdrawals this year. More casualties expected with higher rates.