Mining Opportunities in Emerging Markets Corporate Debt

As emerging markets (EM) growth continues to outpace that of developed markets, these countries have taken on an increasingly important role in the dynamics of the global economy. Along with this growth, local credit markets in many EM countries have matured and EM debt has become a diversified mature asset class representing about 11% of the global fixed income universe.

EM corporate debt has helped fuel this growth. In fact, over the past 10 years, it has grown to the point where it now exceeds the market capitalisation of EM sovereign debt. Yet some investors choose to forgo an allocation to EM corporate debt, possibly based on the misconception that it comes with greater risk and offers little additional benefit. We believe the compelling risk, return, and spread characteristics in this growing asset class have earned it a place in investor portfolios alongside allocations to other global credit investments.

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