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Emerging Markets Debt, an Underinvested Story

March 31, 2017

Why Emerging Markets Debt?

→ Total debt in Developed Markets was 200% of GDP in 1990 and is close to 400% today. What has happened to overall Emerging Markets (EM) debt levels since 1990? Debt has also increased… but only by around 50% of GDP

→ Recent rally in EM Sovereign bonds since the ECB announced plans to buy bonds, with an increasing number of European institutions needing to improve income for actuarial reasons

→ EM Yields are strong… the JP Morgan EMBI Global Diversified, an index of sovereign bonds, yields 5.35%; the High Yield component of that index offers 6.43%

→ A softer U.S. Dollar can be positive for EM, particularly for those countries that run current account deficits

→ While growth in EM has slowed, it remains positive

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