## Figure 1.24. Emerging Market and Frontier Debt Characteristics and the Impact of China’s Inclusion in Benchmark Indices

## Source details

**Canonical URL:** [Figure 1.24. Emerging Market and Frontier Debt Characteristics and the Impact of China’s Inclusion in Benchmark Indices](https://www.imf.org/-/media/files/publications/gfsr/2019/april/english/ch1data/charts/figure1-24.pdf)

## Other formats

- [Markdown version](/-/media/files/publications/gfsr/2019/april/english/ch1data/charts/figure1-24.pdf.md)
- [Structured JSON version](/-/media/files/publications/gfsr/2019/april/english/ch1data/charts/figure1-24.pdf.json)

---

### Key findings and takeaways
- Over the past decade, outstanding frontier debt has increased substantially, with more than 20 debut issuers.
- Increase in China’s weight in global benchmark indices is expected to boost RMB portfolio flows, which could lead benchmark-driven investors to reduce exposures to other emerging markets.
- Frontier issuers’ increases have come mainly from the lower-rated (single B) borrowers.

### Charts and metrics presented (as labeled in the figure)
- 1. Weight of Frontiers in EMBIG Indices (Percent)
  - Vertical axis scale: 0, 20, 40, 60, 80, 100, 120, 140, 160
  - Country labels shown include: BRA, MEX, IDN, POL, ZAF, THA, RUS, COL, TUR, MYS, HUN, CZE, ROM, PER, CHL, ARG, PHP, URU, DOM, CHN
  - A China-related data label: 25, 27.5, 11.6
- 2. Frontier Notional Debt Outstanding by Rating (Billions of US dollars)
  - Vertical axis scale shown in increments (0, 5, 10, 15, 20, 25, 30)
  - Time series shown across years 2004–18 (labels: 2004 05 06 07 08 09 10 11 12 13 14 15 16 17 18)
- 3. Potential Additional Inflows to China from Index Inclusions (Billions of US dollars)
  - Horizontal scale shown with values 0, 100, 200, 300
  - Separate markers for Bond flows and Equity flows
- 4. Estimated Benchmark-Driven Flows Due to China’s Inclusion in JPM GBI-EM Global Diversified Index (Billions of US dollars; percent)
  - Scales shown include 0, 50, 100, 150, 200, 250, 300 (billions) and percent axis with values –15 –3 –2 –1 –10 –5 0 0 51 102 3 (as depicted)
  - Scenarios indicated: Base case: No change in AUM; 10 percent increase in AUM
  - Percent of foreign holdings (right scale); base case
  - Frontier issuers share of debt outstanding; Frontier issuers weight in EMBIG Div
  - Note on panel 4: data on foreign holdings are as of 2018:Q2

### Notes, definitions, and data sources (verbatim from figure)
- Sources: JPMorgan Chase & Co; Arslanalp and Tsuda (2014); and IMF staff estimates.
- Note: In panel 4, Thailand’s foreign holdings of government debt are predominately in local currency. China’s weight in the index is assumed at 10 percent. The numbers for China refer to the values of the two bars and the dot. In panel 4, data on foreign holdings are as of 2018:Q2. Data labels in the figure use International Organization for Standardization (ISO) country codes. AUM = assets under management; Bloomberg Global Agg = Bloomberg Barclays Global Aggregate; EM = emerging market; EMBIG Div = JPMorgan Emerging Market Bond Index Global Diversified; FTSE = Financial Times Stock Exchange Group; JPM GBI-EM = JPMorgan Government Bond Index-Emerging Markets; MSCI AC World = MSCI All Country World Index; RMB = renminbi; WGBI = World Government Bond Index.

*Figure 1.24. Emerging Market and Frontier Debt Characteristics and the Impact of China’s Inclusion in Benchmark Indices*

---


_Source: https://www.imf.org/-/media/files/publications/gfsr/2019/april/english/ch1data/charts/figure1-24.pdf_