October 29, 2026 | Emerging Markets Debt
Portfolio Manager
Portfolio Manager
An income-oriented strategy investing across the full emerging markets fixed income opportunity set.
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https://im.williamblair.com/investments/sicav-funds/lu2879845290-emerging-markets-frontier-debt-fund
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https://im.williamblair.com/investments/sicav-funds/lu2093691256-emerging-markets-debt-hard-currency-fund
We believe frontier debt presents an attractive investment opportunity, supported by resilient fundamentals, high real yields, and improving policy credibility across a number of markets. But after significant spread compression and monetary easing over the past year, we believe the next phase of returns will be driven less by broad market beta and more by carry, country selection, and security selection.
That makes selectivity increasingly important. Scope for further rate cuts remains in markets such as Egypt, Zambia, Kazakhstan, and Kenya as inflation moderates and external balances improve, while easing in Nigeria is likely to be more gradual.
At the same time, tighter credit spreads, more concentrated positioning, and continued volatility in developed market rates argue against a broad-based approach.
Even so, absolute yields remain compelling relative to mainstream emerging markets and developed market sovereign debt, preserving what we believe is a meaningful yield and diversification premium.
Against this backdrop, we remain constructive on frontier debt as we move into 2027, while closely monitoring geopolitical risks and volatility in developed market bond markets.
Below, we highlight the portfolio’s largest exposures across hard currency, local currency, and the overall portfolio.
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Source: William Blair, as of September 2026.
Our top hard-currency exposures are Mongolia, Argentina, and Laos.
Mongolia: Mongolia is a commodity and energy exporter, with coal and energy revenues providing external buffers, and its fundamentals continue to improve.
Argentina: Electoral jitters ahead of next year’s elections have weighed on the bonds, but we believe Argentina is on a positive fundamental trajectory as fiscal discipline and reserve accumulation by the central bank continue.
Laos: We believe the combination of strong carry, improving macroeconomic conditions, and limited duration risk provides an attractive risk-adjusted return profile.
Our top local-currency exposures are Kenya, Nigeria, and Uganda.
Kenya: Inflation remains relatively well contained and external balances have improved meaningfully over the past two years, supporting a more stable macroeconomic backdrop.
Nigeria: High local interest rates, improved FX liquidity, and continued policy reform momentum support the naira. While positioning has become more crowded over time, we continue to believe that attractive carry, stronger investor confidence, and improving macroeconomic fundamentals provide support for further positive returns.
Uganda: We remain constructive on local rates, supported by well-contained inflation, solid external buffers, and stable macroeconomic management. The country also continues to benefit from oil-sector-related investment flows, while policy continuity reinforces our favorable outlook.
Our top total exposures are Kenya, Dominican Republic, and Nigeria.
Dominican Republic: Strong external accounts are underpinned by robust tourism revenues, remittances, and foreign direct investment (FDI) inflows. International reserves remain healthy, while balance-of-payments dynamics have been supportive of currency stability. The Dominican Republic also has solid economic growth and continued access to international capital markets.
Nigeria: Nigeria’s outlook continues to improve, supported by stronger external balances, higher reserves, improved foreign exchange liquidity, and continued reform momentum. High local interest rates and greater investor confidence also remain supportive, particularly for the naira. However, fiscal challenges persist, including low revenue mobilization and high debt-service costs, while much of the improvement in the credit profile is increasingly reflected in tight sovereign spreads. Overall, we believe improving fundamentals remain supportive, although valuations warrant selectivity.
Yvette Babb is a portfolio manager on William Blair’s emerging markets debt team.
Daniel Wood is a portfolio manager on William Blair’s emerging markets debt team.
View Fund:
https://im.williamblair.com/investments/sicav-funds/lu2093699408-emerging-markets-debt-local-currency-fund
View Strategy:
https://im.williamblair.com/investments/separate-accounts/emerging-markets-frontier-debt
View Strategy:
https://im.williamblair.com/investments/separate-accounts/emerging-markets-debt-hard-currency
View Strategy:
https://im.williamblair.com/investments/separate-accounts/emerging-markets-debt-local-currency
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