Emerging market investors often look at the sovereign yield pickup per unit of sovereign risk—essentially, how much extra return they earn relative to the credit risk of a country. Today’s post by Tlotlego Tshegare compares yield pickup for a unit of sovereign risk across EMs. On this measure, South Africa and China offer among the lowest pickups, as South Africa’s high credit risk offsets its yield advantage, while China’s yields remain compressed despite relatively stable credit fundamentals.
