Emerging versus developed countries. We have seen that sovereign issuers around the world are subject to a wide range of environmental, social, and governance factors that analysts will be taking into consideration when forming an opinion on the issuer's credit worthiness. Investors have traditionally divided the sovereign bond universe into bonds issued by developed market governments and emerging market governments. Such a division is rather crude, but using this lens, the ESG factors most commonly attributable to the two categories are as follows.

Emerging markets tend to have less developed legal frameworks with weaker enforcement of property rights and lower level of government effectiveness. Emerging markets tend to suffer from lower levels of political stability and higher levels of corruption. Emerging markets tend to have weaker fiscal capacity to be able to deal with environmental and social problems. Emerging markets tend to have younger population while developed markets tend to have older, aging population. Emerging markets feature lower life expectancy than developed markets. The differences between the wealthy and poor parts of the population and between urban and rural areas tend to be greater in emerging markets. And finally, the level of education and quality of healthcare tends to be higher in developed markets.