In the search for investment yield, one asset class that is expected to grow significantly in the coming years is global local currency bonds, with recent macro conditions set to spur new demand.
Global Head, Capital Markets,
Global local currency bonds are bonds issued in local currencies and offered in offshore markets internationally. These bonds have been around for many years now and are steadily gaining traction from issuers and investors. They are attractive because issuers can settle and repay in the issuance currency or synthetically in a hard currency, like the US dollar.
For global investors, they stand to gain from the strong economic fundamentals of emerging markets and yet avoid potential challenges of local investment requirements. These requirements vary from market to market and could include prohibitive rules on forex hedging and conversion, high withholding taxes, or difficult custody processes.