Emerging-market debt delivered positive returns in the third quarter of 2025, driven by spread tightening and carry returns as global yields softened. According to analysts at William Blair, the J.P. Morgan EMBI Global Diversified Index returned approximately 4.8 % in Q3. High-yield local-currency debt outperformed investment-grade parts of the space. Fund-managers say the combination of resilient fundamentals in many emerging markets and investor search-for-yield amid low global rates fuelled the inflows. Risk remains if U.S. rates reverse or external-financing pressures pick up.