Globally, the COVID-19 crisis has markedly increased debt vulnerabilities as public debt levels reached record highs, with shorter maturities and larger refinancing needs (OECD Sovereign Borrowing Outlook, 2021). In particular, Emerging Market Economies (EMEs) with high debt levels have become more vulnerable to global risks that could trigger a sudden shift in market sentiment, which in turn could put pressure on sustaining market access and managing refinancing risk. A legacy of high debt burden left by the crisis may also limit room for fiscal stimulus during future recessions. While favorable global financial conditions have so far shielded EMEs, the path forward is uncertain.

Prospects for the world economy have brightened due to increased vaccinations and strong policy support. Yet, risks to economic recovery and financial stability remain elevated and unevenly distributed (OECD Economic Outlook, May 2021). A number of risk factors could put pressure on sovereign funding needs and conditions in EMEs including a weak economic recovery, slower distribution of vaccines, renewed waves of new variants. At the same time, a sustained and strong recovery in some advanced economies and rising inflation expectations, in particular in the US, may require adjustments in fiscal and monetary policies. The adjustment process may drive volatility in global bond markets, which in turn may cause sharp fluctuations in capital flows to EMEs. What do these scenarios mean for sovereign debt managers of EMEs in the near- and medium-term? What can be done to safeguard the interests of investors in a world flooded by debt?

Amid existing debt vulnerabilities and an uncertain economic outlook, this webinar will discuss the impact of the uneven recovery from the COVID-19 crisis on government bond markets in EMEs, as well as the challenges, priorities and opportunities for sovereign debt managers.