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August 2017

EM Corporate Debt – Earning a Place at the Table

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Emerging Market (EM) corporates are as varied as the language, climate and cuisines of their home countries. We believe this diverse asset class can serve as an extension to existing corporate credit allocations or as a compliment to EM sovereign exposure. EM corporate debt provides investors with a high quality source of yield, and over the medium- to long-term, we believe companies in this investment universe stand to benefit from a shift in economic potential from developed to emerging markets.

EM economic growth has been accompanied by growth in EM asset classes. Deeper capital markets and rising investor demand has helped the EM corporate debt sector grow 300% in the last decade to become a core component of the global fixed income opportunity set.

EXHIBIT 1: EM corporate debt represents over 16% of the global corporate debt market

EM_Corp_Debt_Earning_a_Place_at_the_Table_chart_1

Source: JP Morgan, Bloomberg, Bond Radar. As of February 2017. EM Corporate debt data reflects corporate and quasi-sovereign external debt. 


EM corporate debt can provide investors with a high quality source of yield versus other fixed income sectors, and also has lower duration exposure than EM sovereign debt. Over 60% of the investment universe is investment grade rated, which may appear surprising to those who assume investing in EM corporate debt requires compromise on credit quality.

EXHIBIT 2: High quality source of yield with relatively low duration exposure

EM_Corp_Debt_Earning_a_Place_at_the_Table_chart_2

Source: JP Morgan, Barclays, Citi Group, Credit Suisse, GSAM. Duration as of June 30, 2017. Past performance does not guarantee future results, which may vary.


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CONTACT US

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Shareholder Services Team
ess@gs.com
+971 4376 34444