Why EM corporate bond appeal is set to soar

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Mike Zelouf, director at Western Asset, a Legg Mason affiliate, explains the positive long-term themes driving his investment thesis for emerging market corporate bonds.

Due to a number of positive economic and political factors (including, but not limited to, years of increasingly transparent monetary policy coupled with fiscal discipline), a significant reduction in sovereign risk in many emerging market (EM) countries over the last 15 years has allowed a deep, robust and liquid local government debt market to develop. Therefore, many EM countries are now financing themselves in their own currencies rather than in US dollars, the historical norm. This development has been extremely important because as a result, the external hard-currency (US$) borrowi...