This investment grade-rated, geographically-diversified asset class offers investors attractive opportunities for yield without excessive levels of risk. We believe this opportunity will become increasingly compelling as global commodity prices stabilize, EM economies grow and corporate fundamentals improve.
The emerging markets USD corporate debt asset class has grown over years along with the steady expansion of the private sector, the growth of the global economy, the deepening of international and local capital markets, and easy central bank monetary policies. These factors have enabled EM corporations to diversify their funding sources and support robust issuance that offers attractive returns to investors. Today, according to JP Morgan, the EM corporates asset class, as measured by CEMBI broad index is roughly similar in size to EM sovereigns and quasis, as measured by EMBIG, and to US high yield.