These external events can also come in the form of interest-rate increases in the U.S. Higher U.S. rates tend to reduce demand for Latin debt, as marginal buyers move back into safer U.S. bonds and depress the value of riskier Latin bonds. Look Beyond the Coupons Price is another thing to consider if you're looking at emerging-market debt. In the U.S. and in most other industrialized nations, investors buy bonds for their regular interest payments. That's not how most professionals look at emerging-market debt. Van Eck Associates Inc. The coupon payment on a Latin bond can be just a small part of the total return.
Defaults are another problem.
Many Latin American countries have defaulted and restructured their debts a couple of times each over the past 20 years. By now, most major economies have adopted economic reforms and put themselves on much more solid footing than in the 1980s. But that doesn't mean you are safe from nonpayment problems. Bond investors will be lucky to get even half of their original investment back. Moreover, many Latin issuers don't provide nearly as much information as U.S. bond issuers.