How private creditors fared in emerging debt markets

We estimate ex post returns to emerging market debt by combining secondary market prices with observed flows based on World Bank data. From 1970-2000, returns averaged 9 percent per annum, about the same as returns on a ten year U.S. treasury bond. This reflects the combined effect of the 1980s debt crisis with much higher returns during 1989-2000. Annual returns since 1986 have been less volatile than emerging market equity returns, but more volatile than returns on U.S. corporate or high-yield bonds. However, unlike these bonds, emerging market debt returns do not seem significantly correlated with U.S. or world stock markets