DoubleLine Foresees Convergence Between Emerging and Developed Sovereign Credits

TAMPA, Fla., March 5, 2026 /PRNewswire/ -- Market risk-pricing of the local currency-denominated sovereign debt of major emerging market (EM) countries is poised to converge with that of developed market (DM) sovereign debt, writes Bill Campbell, Portfolio Manager and Head of the Global Sovereign team at DoubleLine, in a new paper.

The Feb. 18 outbreak of war in the Middle East ignited by U.S. and Israel airstrikes on Iran, according to Mr. Campbell, while impacting near-term price movements in global markets is unlikely to alter a longer-term structural re-equilibration between emerging and developed markets.

The paper, titled "EM-DM Convergence: A Secular Trade on Deglobalization," is available here: https://doubleline.com/wp-content/uploads/DoubleLine_EM-DM-Convergence_February-2026.pdf

Local currency-denominated EM sovereign debt ex-China, based on recent estimates by the Bank of America and the Bank of International Settlements data, totaled $14.9 trillion year-end 2024. The domestic debt of major EM issuers, Mr. Campbell argues, is set to enjoy appreciating currencies relative to DM currencies, improving fiscal fundamentals and favorable demographics as DM sovereigns struggle with aging populations and political paralysis that to date has stymied needed fiscal reform.

This conjuncture, Mr. Campbell writes, has set up a convergence trade largely overlooked by investors. "Since Donald Trump's re-election with Republican congressional majorities, investors understandably have focused on changing U.S. policy as the instrumental mover of markets. That preoccupation, however, has diverted attention from the change in the structural landscape of the globe over the past half-decade. Deglobalization remains underappreciated and underpriced in developed markets (DM)," he writes. Meanwhile a parallel inattention has missed opportunities in the potential next evolution in large EM sovereigns.

"Many of these emerging markets, having benefited from globalization, today preside over much sounder economic and financial foundations than generally recognized by investors. As a result, more-astute investors can take advantage of an EM-DM convergence story shaped by these structural factors."

Mr. Campbell oversees the Global Sovereign Debt at DoubleLine and serves as a Portfolio Manager of the DoubleLine Emerging Markets Local Currency and Global Bond strategies. He is a permanent member of the firm's Fixed Income Asset Allocation Committee. He holds a B.S. in Business Economics and International Business, as well as a B.A. in English, from Pennsylvania State University. Mr. Campbell holds an M.A. in Mathematics, with a focus on Mathematical Finance, from Boston University.

About DoubleLine

DoubleLine Capital LP is an investment adviser registered under the Investment Advisers Act of 1940. DoubleLine's offices can be reached by telephone at (813) 791-7333 or by email at [email protected]. In addition to its headquarters in Tampa, Fla., and an office in Los Angeles, DoubleLine has offices in Dubai, London and Tokyo. Media can reach DoubleLine by email at [email protected].

DoubleLine^® is a registered trademark of DoubleLine Capital LP.

View original content to download multimedia:https://www.prnewswire.com/news-releases/doubleline-foresees-convergence-between-emerging-and-developed-sovereign-credits-302705502.html

SOURCE DoubleLine