EM Fixed Income Flows Update_ Where Supply Meets Demand

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 - EM debt-dedicated funds experienced inflows of US$1.1 billion** this week, a decrease from **US$1.4 billion the previous week [3] - Hard currency funds saw outflows of US$138 million**, up from **US$39 million last week [8] - Local currency funds had strong inflows of US$1.3 billion**, consistent with the previous week [8] - Year-to-date returns for hard currency and local currency funds are **2.2$19.4 billion this week, significantly higher than US$7.5 billion** last week [4] - EM sovereign issuance for the week was **US$15.4 billion, bringing the year-to-date total to US$59.5 billion**, which is **US$11.9 billion higher than the same period last year [8] - Notable sovereign issuers included Romania, Croatia, Poland, Turkey, and Uruguay [8] ESG Bond Issuance - This week saw US$0.5 billion** in ESG-labelled bond issuance, totaling **US$14.1 billion year-to-date [9] Outflows and Inflows Breakdown - Mixed sovereign/corporate funds recorded outflows of US$18 million**, contrasting with inflows of **US$79 million the previous week [8] - Global-mandated funds had outflows of US$372 million**, while regional/country funds saw inflows of **US$1.5 billion [8] Potential Future Issuers - Potential issuers in the investment-grade space include Israel, Ras Al-Khaimah, and Panama, while high-yield potential issuers include Morocco, Oman, Brazil, Colombia, and the Dominican Republic [8] Additional Insights - The report indicates a mixed sentiment in the market, with local currency funds performing well while hard currency funds face outflows [8][9] - The increase in sovereign issuance is noted as historically high for this time of year, suggesting a robust market environment for EM debt [8] Conclusion - The EM fixed income market is experiencing a complex dynamic with strong local currency inflows and significant sovereign issuance, while hard currency funds are facing outflows. The ESG segment is also growing, indicating a shift towards sustainable investment practices.