BofA Merrill Lynch Global Research has launched new Emerging Markets Corporate Bond Indices designed to track the performance of emerging markets corporate and quasi-government debt denominated in US dollar and euro.
The series includes two flagship indices. The BofA Merrill Lynch Emerging Markets Corporate Plus Index (ticker EMCB) is a broad, capitalisation-weighted composite index designed to track the performance of US dollar- and euro-denominated debt of corporate issuers who primarily do business in emerging market countries, while the BofA Merrill Lynch US Emerging Markets Liquid Corporate Plus Index (ticker EMCL) is a subset of the Emerging Markets Corporate Plus Index containing only US dollar-denominated bonds that meet higher minimum size requirements than those required for inclusion in the broad index. It also limits exposure to individual countries and issuers.
These indices are unique as they include segments of the market not previously tracked in a single index, including: quasi-government debt; EUR denominated bonds (in the EMCB); and bonds that meet less restrictive maturity and size requirements (in EMCB). As a result, the EMCB currently tracks 47 countries, and the EMCL 37 countries, providing the most extensive coverage of this rapidly growing market, 72 percent of which is rated investment grade.
In addition, an extensive suite of 30 sub-indices, covering currency rates, region and sector, are available and offer investors a more granular view of the market than was previously available. This flexibility allows customised analysis to meet specific portfolio strategy needs.
“Emerging Market corporates have become a significant component of portfolio strategy because of their growing size, historically attractive risk-adjusted returns and portfolio diversification benefits,” says Anne Milne, head of Global Emerging Markets Corporate Credit Research. Emerging Market economies also continue to grow in importance globally, which leads to increased capital needs among Emerging Market companies. “As sovereign debt declines in importance, traditional emerging markets investors are replacing it, at least in part, with corporate debt. Moreover, traditional high-grade and high-yield investors are using emerging markets corporate bonds to enhance the yield on their portfolios and achieve better diversification,” she added.
