Credit Risk Management in Emerging Market Debt

You are a senior portfolio manager responsible for a large fixed income portfolio. Your firm is considering a significant allocation to emerging market debt instruments. However, there are growing concerns about the credit risk associated with certain countries and issuers. As part of your recommendation to the investment committee, you need to address how you would assess and manage the credit risk of these investments.

Specifically, outline the key factors you would evaluate when assessing the credit risk of emerging market debt, how you would monitor ongoing credit risk exposure, and the strategies you would adopt to mitigate potential losses from credit events.