Over the past decade, borrowing costs for Low- and Lower-Middle-Income Countries (LLMICs) have risen sharply. In 2015, their Eurobond spreads were broadly in line with those of Upper-Middle-Income Countries (UMICs). Today, LLMICs’ spreads are three times higher and far more volatile—placing them in a separate asset class. This divergence raises urgent questions: Why has market confidence in LLMICs deteriorated so much? And why is the gap with UMICs widening, even though both groups face the same global shocks—such as the COVID-19 pandemic and rising U.S. interest rates? […]