In 2015, some 17 per cent of emerging market hard currency debt had a maturity of 20 years or more. By the start of 2021, that proportion had grown to 27 per cent. Even local currency denominated emerging market debt, which tends to be shorter-dated, has moved along the maturity curve. Over the same time period, the proportion of local currency debt with a maturity of five years or longer had risen 11 percentage points to 58 per cent¹.
That shift reflects growing demand for yield from investors starved of income. But at the same time, bondholders have recognised the importance of taking a long-term view on environmental issues. This is apparent in both the appetite for green bonds – capital earmarked for environmental or climate-related projects – and, more generally, bonds that fall under the environmental, social and governance (ESG) umbrella.
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¹JPM EMBI-GD and GBI-EM. Data as at 25 January 2021.
Head of Emerging Market Debt
Pictet Asset Management