Goldman Sachs sees double-digit returns in emerging market junk

LONDON (Reuters) – Analysts at Goldman Sachs have forecast double-digit returns on high yield – also known as junk – emerging market bonds over next 12 months if the world gets over its coronavirus worries.

“We continue to think EM HY sovereigns offer the best risk-adjusted total return opportunity: our 12m target of ~600bp for EM HY spreads (from ~730bp currently) implies double-digit total return potential,” Goldman said in a note on Thursday.

The investment bank also forecast emerging market governments would issue at least $150 billion of dollar-denominated debt this year as they look to tackle the crisis, though it could be even higher.