APS Financial

High Yield Emerging Market Bonds

Emerging Market Bonds offer a mix of sovereign, municipal, corporate and structured debt just as developed markets do. Offerings are divided into domestic and external, with the former being local currency issues and the latter denominated in U.S. dollars or another developed country’s currency. During the period from 2002 to 2007, many domestic bond issues performed well because local currencies had appreciated versus the dollar. Currency fluctuations add an extra element of risk to emerging market debt investments.

Emerging Market Bonds often offer double-digit yields and capital gains potential because:

  • Many foreign economies are growing faster than the U.S. economy. * Inflationary pressures have driven interest rates higher.
  • A falling dollar creates an added factor that may lead to increased total returns.
  • Yields are often higher in Emerging Markets to attract investment capital.

As with all investments, analysis and selection of specific Emerging Markets is key to investment success. Your APS Financial professional can assist you in selecting Emerging Market Bonds that fit your investment criteria.


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Investors in high-yield products should keep in mind that there is no such thing as a free lunch. The price of receiving above-average income potential is above-average risk of substantial price declines. Even though returns on high-yield securities historically have compensated the investor for the additional risk, there is no guarantee this will be true in the future.