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What is emerging market debt?

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1 minutes to read by  BlueBay Fixed Income Team May 21, 2025

Despite being the world’s largest pool of credit, at $29 trillion in size, emerging market debt (EMD) remains one of the most misunderstood markets amongst investors. We provide an overview of EMD and help investors consider the practical aspects of investing in this asset class.

Key points

  • Emerging market debt refers to the outstanding tradeable debt issued by governments or corporations domiciled in countries considered 'emerging and developing' by the International Monetary Fund (IMF).

  • Not all countries are at the same stage of development and market liquidity and governance factors have historically been a key factor in defining classification.

  • The EM debt universe comprises four primary sub-classes. This is a large heterogenous asset class with debt issued in both hard currency (denominated in a globally traded currency of a developed country, such as the US dollar or euro) and local currency and containing both sovereign and corporate debt.
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