Home etftrends.com High Yield Emerging Market Bond Sales Likely to Keep Up Pace in...

High Yield Emerging Market Bond Sales Likely to Keep Up Pace in 2020

Advertisement
Digital Marketing & Website Design for ETFs

As fixed income ETF flows have reached record levels, the emerging markets (EM) high yield bond space is also experiencing record activity with bonds sold in 2019. That pace will more than likely keep up in 2020, according to a recent Wall Street Journal article.

“Companies in developing nations sold a record $118 billion of high-yield dollar bonds this year, and are likely to keep up a fast pace in 2020,” a Wall Street Journal report noted. “The total has more than doubled from five years earlier, according to Dealogic data. The figures cover debt in dollars with subinvestment grade credit ratings, or no rating, and run to Dec. 18. They don’t include bonds sold by governments.”

It’s been a rocky ride for EM assets thanks to a U.S.-China trade war that appeared to be on its way to a resolution, only to be derailed by more back-and-forth tariffs and then back to a “phase one” agreement. Either way, EM appears to be ending the year on a positive note.

“It was one of those weird years where the economic situation was worse than expected from the beginning of this year,” said Michael Kushma, the chief investment officer for global fixed income in New York at Morgan Stanley Investment Management. “That makes investors worried that we have all the good news priced in and that next year it’s going to be much more challenging.”

For investors seeking high-yielding income and emerging markets exposure, they can look to the VanEck Vectors EM High Yield Bond ETF (NYSEArca: HYEM). HYEM seeks to replicate the ICE BofAML Diversified High Yield US Emerging Markets Corporate Plus Index, which is comprised of U.S. dollar denominated bonds issued by non-sovereign emerging market issuers that have a below investment grade rating and that are issued in the major domestic and Eurobond markets.

Fund facts:

  • Focuses solely on the non-sovereign segment of the high yield emerging markets bond market
  • Currently lower average duration versus high yield U.S. corporate bonds
  • Lower historical default rates compared to high yield U.S. corporate bonds

Top 10 debt holdings as of Dec. 18:

  1. Southern Gas Corridor Cjsc: 0.74
  2. Sberbank Of Russia Via Sb Capital Sa: 0.69
  3. Teva Pharmaceutical Finance Netherlands: 0.61
  4. Dae Funding Llc: 0.57
  5. Teva Pharmaceutical Finance Netherlands: 0.56
  6. Abja Investment Co Pte Ltd: 0.54
  7. Yapi Ve Kredi Bankasi As: 0.52
  8. Kazmunaygas National Co Jsc: 0.51
  9. Eskom Holdings Soc Ltd: 0.50
  10. Kazakhstan Temir Zholy Finance Bv: 0.49

For more market trends, visit ETF Trends.

newETFs.io respects the hard work of others and gives all credit to the remarkable folks at ETFTrends.com. This excerpt/article was pulled from their RSS feed; click here to view the original. Please note that on occasion, the RSS feed will not have the author. When this happens this site defaults the author to "News". Make no mistake, this excerpt/article was not created by newETFs.io, it was simply shared with you.