Emerging market bonds are the bonds offered by less developed countries. The government normally issues them. These exclude borrowings from government, supranational organizations such as the International Monetary Fund or private sources. These include loans that are collateralized and are offered in the financial markets. Among all emerging market bonds, investors prefer to invest in mutual funds.
These bonds tend to have a lower credit rating when compared to any other sovereign debt because of the increased economic and political risks.
Countries normally do not opt for emerging market bonds unless the borrowing is wide enough to justify the costs involved. Hence, most of the developing and under developed countries are behaving indifferently to emerging market debt instruments.