Workflow
Where Supply Meets Demand
Dezan Shira & Associates·2024-12-10 02:48

Summary of EM Fixed Income Flows Update Industry Overview - The report focuses on the Emerging Markets (EM) fixed income sector, detailing fund flows, credit issuance, and ESG (Environmental, Social, and Governance) bond issuance. Key Points Fund Flows - EMDD funds experienced outflows of US288million∗∗thisweek,asignificantdecreasefrom∗∗US288 million** this week, a significant decrease from **US2.7 billion in the previous week [2] - Hard currency fund outflows decreased to US733million∗∗from∗∗US733 million** from **US2.3 billion [3] - Sovereign fund flows remained nearly flat with outflows of US62million∗∗[3]−Corporatefundssawoutflowsdropto∗∗US62 million** [3] - Corporate funds saw outflows drop to **US415 million from US2.2billion∗∗[3]−ETFsrevertedtooutflowsof∗∗US2.2 billion** [3] - ETFs reverted to outflows of **US135 million from inflows of US140million∗∗[3]−Localcurrencyfundflowsimprovedtoinflowsof∗∗US140 million** [3] - Local currency fund flows improved to inflows of **US102 million from outflows of US511million∗∗[4]−Year−to−datereturnsforhardcurrencyandlocalcurrencystandat∗∗8.5511 million** [4] - Year-to-date returns for hard currency and local currency stand at **8.5%** and **-0.1%**, respectively [5] Credit Issuance - Total EM credit issuance this week was **US6.3 billion, up from US2.8billion∗∗lastweek[5]−Sovereignissuanceaccountedfor∗∗US2.8 billion** last week [5] - Sovereign issuance accounted for **US2.5 billion, bringing year-to-date sovereign issuance to US188.1billion∗∗,whichisanincreaseof∗∗US188.1 billion**, which is an increase of **US53.7 billion compared to the same period in 2023 [6] - Notable sovereign issuers included Nigeria and Korea, with Nigeria issuing US700million∗∗and∗∗US700 million** and **US1.5 billion in 2031 and 2034 bonds, respectively [6] - Potential future issuers include the Philippines, Mexico, and Morocco [6] ESG Issuance - This week saw US0.3billion∗∗inESG−labelledbondissuanceinEM,bringingyear−to−dateESGissuanceto∗∗US0.3 billion** in ESG-labelled bond issuance in EM, bringing year-to-date ESG issuance to **US127.4 billion [7][15] Additional Insights - The report indicates a shift in regional fund flows, with AxJ (Asia ex-Japan) seeing inflows of US332million∗∗,while∗∗LatAm∗∗(LatinAmerica)and∗∗CEEMEA∗∗(CentralandEasternEurope,MiddleEast,andAfrica)sawoutflowsof∗∗US332 million**, while **LatAm** (Latin America) and **CEEMEA** (Central and Eastern Europe, Middle East, and Africa) saw outflows of **US27 million and US$2 million, respectively [5] - The overall trend indicates a recovery in local currency inflows and a stabilization in hard currency outflows, suggesting a potential shift in investor sentiment towards EM assets [4][5] Conclusion - The EM fixed income market is showing signs of recovery with improved local currency inflows and a significant reduction in outflows from hard currency funds. The increase in sovereign issuance and ESG bonds also reflects a growing interest in sustainable investment opportunities within the EM landscape.