We analyze how global and local factors affect portfolio allocation by euro area investors in emerging markets at the bond-level. First, cross-sectional analysis reveals a strong preference for home (Euro) currency bonds. Second, panel regressions, whether at the bond or aggregate flows level,...

The paper investigates the international integration of EM sovereign dollar-denominatedand local-currency bond markets. Factor analysis is used to examine movements insovereign bond yields and common sources of yield variation. The results suggest that EMdollar-denominated sovereign debt markets...