A remarkable decade in emerging market corporate bonds

Ninety One has just celebrated an important milestone: 10 years of managing EM corporate bond portfolios. The asset class has changed significantly. Victoria Harling reflects on this remarkable decade and considers the present and future for EM corporate bonds.

Jun 2, 2021

5 minutes

Victoria Harling
Ninety One has just celebrated an important milestone: 10 years of managing EM corporate bond portfolios. The asset class has changed significantly. Victoria Harling reflects on this remarkable decade and considers the present and future for EM corporate bonds.

The fast view

  • Emerging Market (EM) Corporate Debt market has become a lot more diversified — it now gives investors access to a broad range of opportunities, spanning sectors and covering regions as diverse as Latin America and the Middle East.
  • Investors also now have a wide choice across the credit rating spectrum according to their risk appetite.
  • The asset class offers investors an attractive way to source yield in today’s bond markets without introducing excessive additional risk to their portfolios. It also provides an opportunity to tap into the growth prospects of some major global businesses.
  • We expect many EM companies to benefit from a strong improvement in global growth as the world’s economies recover from pandemic-related weakness, but there will be winners and losers, so a highly selective investment approach is vital.
  • Among key trends, climate change is creating transition risks for some industries, as well as opportunities for industries able to participate in decarbonisation. For an investor, a deep understanding of the risk and opportunities at an individual sector level will be vital.

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Authored by

Victoria Harling
Portfolio Manager

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