The market for emerging-market bonds denominated in local currencies reached $6,7 trillion as of August 2025, exceeding the $1 trillion dollar-denominated debt market by more than six times. In 2025, these local-currency bonds yielded between 9% and 19% in USD terms, marking the best performance since 2019.
Foreign ownership in key markets has declined significantly since early 2020. In Mexico, foreign holdings dropped from 29% to approximately 11%, while in Indonesia, the share fell from nearly 40% to about 13%. Domestic institutions, including pension funds, banks, and insurance companies, have replaced foreign capital in markets like Brazil, India, and South Africa.
JPMorgan plans to launch the GBI-EM Edge frontier local-currency government bond index by the end of September 2026. The index will track $330 billion in debt across 26 countries, with Africa accounting for 45% of the weighting. The average nominal yield for this index is projected at approximately 10.4%.
In August 2026, the existing JPMorgan GBI-EM Global Diversified index recorded a return of 0.90% in USD terms. Analysts attribute the resilience of local-currency bonds to increased domestic institutional ownership, high real yields resulting from central bank rate hikes, and the undervaluation of many emerging-market currencies.
