Emerging Market Corporate Bonds Outperform as Buybacks Offset Limited New Issuance
• Emerging market corporate bonds are outperforming US corporate bonds due to limited new bond issues and companies buying back debt • The yield spread between EM and US corporate bonds has narrowed to the lowest level since June 2021 • Ukraine and Brazilian companies are leading the gains among EM corporate bonds • Companies have less pressure to issue new debt due to sufficient cash balances, earnings growth forecasts, and moderated refinancing needs • Analysts expect negative net new supply in 2024 which supports the EM corporate bond market