COMMENT:

Rarely has the choice facing the emerging market investor been so stark.

Bonds are so richly priced that around 30 per cent of the entire universe of euro-denominated EM debt, with a face value of about €115 billion ($197.5b), now trades with a negative yield, according to calculations by investment bank Morgan Stanley. That has never happened before.

What is more, not all of this negatively yielding debt consists of short-maturity bonds issued by the EU sovereigns of eastern and central Europe, which are usually considered "safe" by fixed income investors.

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