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The EM fixed income universe version 8.0
The Emerging View
31 July 2019
Welcome to the 8th annual review of the Emerging Markets (EM) fixed income asset class. Using new data
from Bank of International Settlements and other sources, we establish that the EM bond market had grown
to a size of USD 26.5trn, or 23% of global fixed income at the end of 2018.
About 82% of EM bonds are now denominated in local currency, the rest are mainly Dollar-denominated
‘external’ bonds. External debt is therefore a much smaller market, but it is more diversified than local markets
in terms of index representation. EM government make up 45% of all EM bonds, while corporate bonds make
up 55% of the total. In terms of regional splits, Asia dominates the EM fixed income market with 78% of all
outstanding bonds. China alone now accounts for more than half of all outstanding EM bonds.
Going forward, on conservative projections, the EM fixed income universe should grow to at least USD 39trn
by 2024 at which point it will constitute 26% of the global bond market. Index representation, though improving,
remains poor overall. However, investors can still obtain great diversification if they take exposure across
all the four types of fixed income markets in EM for which the main benchmark indices now cover
154 individual markets.