Argentina, Turkey Lure Investors Seeking High-Yield Bond Returns.

Global investors are increasingly investing in high-yield government bonds in emerging markets such as Argentina, Turkey, and Zambia. These bonds have seen a significant rally due to promises of reform, restructuring deals, and reduced default risks. The strategy of investing in emerging-market junk bonds yielded returns of 18.5% last year, nearly triple the returns of investment-grade sovereign debt. Wall Street firms like TCW, Neuberger Berman Group, M&G Investments, and PGIM Fixed Income are optimistic about the momentum behind riskier developing-market debt in 2024, with expectations of lower interest rates and a potential soft landing in the global economy. However, investing in lower-rated debt comes with uncertainty, and the outlook for central bank pivots remains a question. Despite this, there is still a significant opportunity for high-yield bonds in the sovereign space. Argentina and Turkey, in particular, are seen as turnaround stories, with Argentina's new administration promising economic reforms and Turkey's President Erdogan implementing orthodox policy making. Other countries like Angola, Nigeria, Kenya, and El Salvador are also expected to tap into international bond markets this year. The article concludes by mentioning ongoing debt negotiations in Zambia and Ghana, which could present opportunities depending on the outcome of restructuring talks. [Extracted from the article]