Markets began reacting to the potential economic impact of the coronavirus during the week of February 18, and we could see further volatility in the coming weeks - but we believe changes in emerging markets debt (EMD) spreads present a clear buying opportunity. Below we discuss our outlook and likely investment implications.
Background
Having been previously insulated from the impact of the virus, spreads on sovereign EMD, as represented by the JPMorgan Emerging Markets Bond Index ((EMBI)) Global Diversified, widened by nearly 70 basis points (bps) to 373 bps from February 18 to 28.
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