GEMs Flow Talk: YTD quality rises, 80% are upgrades; Xovers here, declining demand fades

Research evidence excerpt

GEMs Flow Talk: YTD quality rises, 80% are upgrades; Xovers here, declining demand fades

% of all EM corporate Exhibit 12: China represents 11% of corporate index-eligible debt

issuance, down from the 2018 peak of 48%; volume dropped of 75% EM Corp Index (EMCB) market value with & without China (peak 30%),

Annual USD & EUR Corporate New Issuance ($bn) for selected years Russia removed at a price of zero on 3-31-2022 (Nov 2020- Nov 2025)

Country 2018 2020 2022 2024 2025 2026 YTD 1,800 35%

US$ bn China 165 197 74 65 71 23 30%

Rest of EM corp 178 295 129 278 346 188 1,500 25%

Total 343 493 204 343 417 210 20% 1,200

% China 48% 40% 36% 19% 17% 11% 15%

Source: BofA Global Research, EMDL on Bloomberg 900 10%

BofA GLOBAL RESEARCH May-21 May-22 May-23 May-24 May-25 May-26

EMCB Index EMCB ex China China/EMCB % (rhs)

Source: BofA Global Research, Bloomberg, ICE Data indices, LLC

BofA GLOBAL RESEARCH

Exhibit 13: China EXD issuance = 11% of all EXD corp issuance YTD Exhibit 14: China LDM issuance = 72% of all EM LDM issuance YTD

EXD issuance: 2016-26, China share down from 48% in 2018 LDM issuance: 2016-26, China share down 2 ppt in 2026

800 50% 15,000 75%

600 40% 12,500

30% 10,000 70% 400

20% 7,500 65% 200 10% 5,000 0 0% 60% 2,500

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 0 55%

Sovereign Corporate % Corp issuance from China 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

Source: BofA Global Research, Bloomberg. We believe that Central banks (CBs) may contribute Corporate Sovereign % issuance from China

about 20%-40% offshore flows and considering most of CBs only trade CGBs and that they are

more stable buyers compared to others, we estimate that perhaps 60% of the flow is CBs Source: BofA Global Research, Bloomberg

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH