An increasing fraction of global capital has been allocated to governments and corporations in EMEs, with large inflows into cyclical sectors like mining and energy. At the same time banks have been retrenching from some activities and risks, not least because of the new post-crisis regulation.
Although bank loans still account for the largest share of EME debt, the share of bonds has nearly doubled over the last decade, and increased issuance has been largely absorbed by investment funds held by individuals and institutions domiciled in the AEs.