Over the past several years, emergingmarkets (EM) bonds have offered some interesting opportunities for investorsseeking yields higher than those to be found in the developed markets. Notleast in those countries with negative rates.
EM bonds can be divided into fourcategories: hard currency sovereign and corporate, and local currency sovereignand corporate. As many EM countries have strengthened their economies since thedebt crises of the late ‘90s, issuance of local currency sovereigns has grown whilethe proportion of sovereign bonds denominated in hard currencies has declined.
On the other hand, the universe of hardcurrency corporate bonds has continued to grow, while the investable universeof local currency corporate bonds remains relatively small. It will beinteresting to see if future growth of the local corporate market follows asimilar trajectory to local sovereign bonds, especially if the U.S. dollarremains strong.
Source: MVISData as of September 30, 2016. Sovereign (Local FX) is represented by the MVISEM Sovereign Bond (Local FX). Sovereign (USD & EUR) is represented by theMVIS EM Sovereign Bond (USD&EUR). Corporate (Local FX)
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