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The EM fixed income universe

The Emerging View

16 August 2016

This is the 5th annual review of the EM fixed income asset class. The analysis covers all the EM countries whose banks and governments submit data to the Bank of International Settlements (BIS), making this one of the most comprehensive surveys of EM fixed income so far. We estimate that the EM debt securities universe has reached USD 18.5trn as of the end of 2015 and that total financing in EM is now close to USD 48trn. Still, this means that EM entities only account for about 20% of total global financing at a time when EM economies make up nearly 60% of global GDP. The fact that EM issuers are finance constrained, however, ensures that leverage ratios remain sensible and reduces the risk of bubbles. Today, EM fixed income offers a vastly superior alternative to negative yielding developed market bonds.

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