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New issuance of emerging markets dollar-denominated corporate debt continues to surge, driven by growing investor demand, low interest rates and improved access to global credit markets, according to Market Vectors’ fixed income portfolio manager
Fran Rodilosso. Rodilosso noted that emerging markets have already had a record year in terms of issuance of dollar-denominated corporate bonds, the culmination of seven years of steady growth for the asset class.
“A cursory look at the growing volume of new issuance might suggest a bubble could form in the asset class,” said Rodilosso. “However, it is interesting to note, of the approximately $220 billion in dollar-denominated debt issued from emerging markets so far this year, less than $35 billion is rated below investment grade. In 2012, issuance thus far by high yield borrowers has actually been lower than in 2010 or 2011.”*