Title: Season 2 Episode 5 - Governance Matters: Assessing Sustainability in Emerging Market Debt

Abstract: Do emerging and developed market bonds differ when it comes to evaluating sustainability? In Episode 5 of the All Angles podcast, Vish Hindocha and Mahesh Jayakumar discuss how they assess materiality when deciding whether or not to invest in a country’s bonds and share their empirical analysis of the impact of different factors on fixed income returns.

Vish: Hello and welcome to another episode of the All Angles podcast.

(On screen audible disclosure)
The views expressed are those of the speaker and are subject to change at any time. These views are for informational purposes only and should not be relied upon as a recommendation to purchase any security or as an offer of securities or investment advice. No forecast can be guaranteed. Past performance is no guarantee of future results.

Vish: I'm delighted to welcome back Mahesh Jayakumar. Mahesh is a director in ESG fixed income at MFS. Mahesh, welcome back to season two of All Angles.

Mahesh Jayakumar: Thanks, Vish. I had a chance to listen to season one. Amazing job. Congratulations.

Vish: Thank you so much, partly thanks to amazing guests like you. So, for those that haven't had a chance yet to listen to your first episode, I did re-listen in preparation for this and thought about some of the other things that you've been talking about. So just some key points that people may have missed out on or just to remind them, you made some amazing book recommendations. I will confess that Ruskin Bond is still climbing its way steadily up my to-read list, and we'll get into books in a minute, I'm sure. You talked a lot about the power of teams, the power of collective expertise, how we need to think through the complexity and nuance of this. The third thing that I thought you really drove home was that we have to go back to first principles sometimes. We haven't figured this out for major building blocks and asset classes for some of our clients. Again, we can't just copy and paste from equity or corporate fixed income for all the other asset classes. We have to really think it through bottom up.

It's really that last one, is why I wanted to bring you back in to talk about an asset class that seems to be on the front of every asset allocator's mind that I get to talk to across the world, and that's emerging market debt. So, in the emerging market debt space, it seems that lots of asset allocators are really, really interested in this space for a couple of key reasons. You’ve got yield, you’ve got capital return, you’ve got diversification against other more mature bond portfolios. Again, there’s this ability to think through long-term impact through EMD as well. So that’s why it’s coming to the fore. But it then begs the question, "How do we think about sustainability in the context of emerging market debt?" So, let's start there.

Mahesh Jayakumar: Yeah, it's a great point, and thank you so much for inviting me today, Vish. I'm glad you started with the sustainability journey, if you will, in various parts of fixed income. Previously, we talked about corporate bonds last time and fixed income in general, followed by equities on the sustainability integration journey. I would say sovereign bonds are now as mature or approaching the same stage as corporate bonds and equities in terms of thinking about ESG factors. How do you implement ESG integration in this asset class? How do you think about risk and return, et cetera? Now, let's step back for a minute within sovereigns itself. Before we talk about ESG factors or sustainability in sovereigns, what are sovereign bonds? Actually, sovereign bonds are one of the biggest parts of the fixed-income debt market. I don't know if our audience realizes that most of the debt outstanding in this world today is actually sovereign market debt.

It's both developed market and emerging market sovereign market debt, more so than corporates. I would say almost 50%–60% of the debt outstanding is typically sovereign debt. Part of that, the bigger debt actually belongs to developed markets, not emerging markets. Emerging markets have a choice, typically, to issue debt in either their own local currency or in what we call hard currency. Basically, the top three global currencies, dollars, British pounds, et cetera. Countries typically issue this debt for multiple reasons. Number one, to balance their budgets. So, a fiscal deficit, they need to spend on a variety of purposes. You raise revenues through taxes, of course, but there might be a deficit in a given year. So you go, typically, to investors and ask for funding and capital in order to continue, basically, I was going to say operations as usual, but life as usual in a country to provide for its citizens, provide services and continue life as a country.

So, you can imagine, emerging market debt became very prominent with the issuance of Brady bonds, if you remember. I forget if it's the late '80s or '90s, and Brady bonds were the first, and it was basically Latin American-focused debt issuance. Fast-forward to your point, the emerging market debt universe has grown at a very healthy clip. It appeals to investors precisely because of some of the characteristics you mentioned earlier. Now, when you think about sustainability, say, how does sustainability and thinking about ESG risk factors affect the return profile? That's the fundamental question if you will. We can get into what the individual E, the environmental pillar, S, social pillar, and G, the governance pillar factors are. But at the heart of it, it's the same principle I mentioned earlier, which is, for MFS, we are integrators and not excluders.

So, we don't tend to punish a certain country by excluding this country's bonds from our portfolio because they're associated with a particular industry or a particular controversy. We assess that in the context of financial materiality. Is this ESG factor going to be financially material and cause returns to be compromised, just like we talked about for corporate bonds in that context? So, it's the same fundamental application of ESG integration, but there are different factors that you think about in each of those three pillars that I mentioned earlier.

Vish: Okay, so the same fundamental principles. So back to the first principles, let's think about materiality from the financial outcome perspective, but we're applying it to a very different asset class, as you just said. We're not talking about operations; we're talking about life in society. We're not talking about corporates; we're talking about sovereigns or quasi-sovereign states. We're talking about debt markets, not necessarily, strictly speaking here, equity markets. So, what are some of the differences in application that you think about when you're just assessing the broader EMD universe? So, what things bubble up for you in terms of what is material when you look at an emerging market debt sovereign?

Mahesh Jayakumar: I've always talked about the importance of governance factors. We talk about the importance of governance factors on the corporate side. For example, is it a good management team? Is there a decently independent board of directors overseeing the management team in terms of the execution of policy and strategy, et cetera? Apply that same thought process on the sovereign side. What does that look like? It could mean everything from, "Is there a stable political environment or a stable government in place in order to create the economic conditions for growth in a country?" That also means, is there a rule of law? Are there courts and jurisdictions to pass laws? How do you think about corruption in a given country? So, these sorts of very key important governance factors, first and foremost, drive emerging market returns. Because without the necessary conditions for stability and growth, you can't have other things in place that you might tend to think about in terms of the social pillar, for example, access to education, access to health care, access to technology infrastructure.

All these things come because you create the basic necessary conditions through governance factors, first and foremost. Increasingly, environmental factors are also starting to bubble up for a variety of reasons. First, you can imagine that many of these emerging market countries are very dependent on commodities. They're either dependent on mineral commodities or they're dependent on oil and gas as exports, for example, for their budgets. On the other hand, from a physical risk perspective, these countries are also exposed to extreme weather events. So, I would say that's how we start to think about emerging market sovereigns, governance factors, good government stability, the political stability factors for enabling the population to contribute, live healthy lives and thrive, and therefore lead to ultimately what we investors look for in emerging market sovereign debt, which is growth, development and in returns.

Vish: So, if I follow you, you're saying governance factors that sort of lay the foundation then for the ability to repay and therefore our comfort and confidence as investors to go and loan that capital, and that underpins the social safety nets and some of the social factors that can be indicators of a healthy and growing economy. You mentioned that emergence more recently of climate factors, environmental factors, and there's a double-edged sword here where some of these are commodity-rich exporters that are dealing with things like just energy transition, and others are highly exposed to physical risks and need capital investment in order to think through adaptation and mitigation. So, a lot of what we talked about in season one of this podcast season and even in season two, the industry tends to gravitate towards climate as this ubiquitous, undiversifiable systemic risk that we need to think about. Are you saying that for EMD, climate is less important in your analysis and your assessment of these things relative to some of the governance factors and some of the other social factors that you just highlighted?

Mahesh Jayakumar: It's a great question. I certainly don't want to diminish the importance of environmental factors. The reason I said what I said was, at MFS, our analysts have done empirical testing of ultimately what drives spreads and therefore returns. So that's number one. Number two, you can imagine a higher ESG profile or better sustainability profile of a country, ironically, tighter the spreads. If you have tighter spreads, you have less total return at the end of the day compared to, so in an irony, the worst ESG names, if you will, have wider spreads and therefore better returns, if you will. But that's where the investor's homework has to come in terms of understanding the risk and that return that they might be getting.

So, when we did an analysis of trying to understand what drives spreads in emerging market debt from an E, S and G pillar perspective, it turned out that governance factors were the predominant driver of spreads, and that made sense, because when you pick up a newspaper and you see headlines of election fraud or chaos on the streets, what happens to the trading of these bonds? Spreads blow out, prices come down and folks are concerned about whether they're going to be able to get their money back or what happens. Not surprisingly, governance factors always, first and foremost, drive spreads in emerging market debt.

By the way, we used to think that developed markets were immune to governance issues. Unfortunately, we've seen our fair share of governance-induced shocks to the financial market and the sovereign bonds of these developed markets recently. The US debt crisis is a great example of we cutting it down to the wire in terms of passing. There's something called a CDS, without being too technical . . .

Vish: Yeah.

Mahesh Jayakumar: ... and that gives you... It's a measure of insurance on a country's sovereign debt. CDS levels for the US shot through the roof because we were not sure about whether we were going to get the debt ceiling resolution passed or not. So, governance, like it or not, always drives spreads, first and foremost, in emerging market debt. The second pillar that drives spreads in our empirical research was social factors and social stability. Environmental factors were the least correlated in terms of spread movement. That's not because investors are ignoring them. That's not the case. It's just a question of what factors come to top of mind in terms of driving and understanding the risk profile of a particular sovereign bond.

As climate change becomes more and more important to investors as a risk factor in terms of analyzing the risk-return profile of sovereign bonds, I am positive that the correlation that I mentioned of G factors followed by S followed by E is going to change, and we can observe this behavior because we tend to run the analysis on an annual basis to see how these factors are shifting in terms of driving spreads. So, I am a firm believer in the future, as you have maybe better governance and better social stability, but environmental factors are affecting a country's ability to be able to provide for their population or have the financial and political stability that they need. Absolutely. Those factors are going to start driving sprints.

Vish: When you maybe start seeing some of the more acute physical hazards from physical or transitional risk start to actually play out and affect a company's ability to repay. That's super interesting because, again, something that we touched on very briefly last time was a collaboration that you were involved in called Assessing Sovereign Climate-related Opportunities and Risks. So, we don't need to go into ASCOR, as it's known, necessarily, but it is interesting to me that you look at the models and the empirical data that tells you on a backward-looking basis, climate hasn't actually made a massive impact on spread levels relative to governance issues or social issues. But there's a belief it feels across the platform that this is something that, and again, as active investors, our job is to price future risk and return . . .

Mahesh Jayakumar: Exactly.

Vish: ... not to look over our shoulder. So, I think it's interesting that we are investing the time, the energy to really research this and try and get ahead of when does this actually become priced in, and that's the value. Again, one of the reasons investors like this asset class is because it's sort of a rich area for alpha and active management. Is that a fair summation? Are there any other factors that you think that the sovereign risk team or the emerging market debt team are thinking through as slightly more frontier E, S, or G issues?

Mahesh Jayakumar: No, I think you laid out the case very well. I might point out energy security given the Russia-Ukraine war and the impact on energy security for many emerging market countries, including some of the biggest ones. The concern was what would happen to energy supply and energy prices, if you remember, initially shot up to the roof. That's a problem for countries that might be importing energy because it literally raises their bill in terms of how much they have to pay and therefore impacts their own ability to provide services to their citizens if you're paying a higher energy bill on the front end. Of course, energy prices eventually stabilized. But the reason I bring this to you is, an important part of thinking about this climate puzzle for sovereigns is also thinking about not punishing countries that might be explicitly dependent on energy exports.

Do you shun them? Because sometimes it's very... I've seen some of our ESG colleagues think about this as a very black or white. This country is way too dependent on energy exports and fossil fuel exports, for example, and therefore I'm going to shun the bonds of this particular country. It's not that black and white. The country might be trying to diversify away from fossil fuel exports, and if that's the case, do you give them a chance as an investor? On the flip side, if you're one of the biggest energy importers and your debt levels are perpetually high because of that, do you punish them? So, there is no perfect picture, if you will, when you think about climate factors and how this concept of energy security in the context of a world that has to transition away from fossil fuels, decarbonize. It's not as easy.

I'll apply the same principle to coal. So, is removing coal and thinking about ex-coal in the investment process is a darling of the ESG and sustainability crowd? Emerging market countries typically depend on 50% to 60% of their utility feed stock, is coal. Can you suddenly just tell them to abandon that as an energy source for the electricity generation? What does that mean for their companies and industries? What does it mean for their citizens?

Vish: Yeah.

Mahesh Jayakumar: So, I just want to point out also that this concept of energy transition is very nuanced, especially in the context of emerging markets. So, for us as investors, yes, it's part of the E, environmental pillar, and it comes under the broader climate umbrella, but it's a very important aspect that investors should think about alongside governance, social, et cetera.

Vish: Yeah, I think it's a critical point because, from the developed market standpoint, you can get complacent about the type of energy security, consistency and reliability that we have. I know each of us have traveled through India recently. If you go to India, for example, which is coal dependent in a large extent and often attracts controversy because they are unwilling to sign agreements that say they're going to fully retire coal assets within certain deadlines, but energy intermittency is a massive issue for billions of people ...

Mahesh Jayakumar: Absolutely.

Vish: ... in India. How do you help the economy grow and transition out of that is the second-order question that we need to start answering. So, switching gears just very slightly, you talked about there's no perfect picture, there's no perfect way to think about this, and measure this. One thing I want to pick up on is, how do we provide better transparency to our clients, better reporting or disclosure to our clients? And I'm going to frame the question around a specific piece of regulation, although the regulation is not necessarily that important.

So, this is under, the European Union has a Green Deal. One of the legs of the Green Deal is a piece of legislation called the SFDR, the Sustainable Finance Disclosure Regulation. Among many things, there's about 16 different things that you have to think about under that, but one of them is a labeling schema. So again, some people will be deeply familiar with this, but there's Article 6, which means your ESG integration. There's Article 8, often known as light green, and Article 9, which is known as dark green, which is typically impact funds. Now, Article 8 is for those managers that are claiming that they are systematically promoting an E, S or, in this case, G, characteristic through their investment platform.

Now, the MFS emerging market debt strategies have recently been classified as Article 8. There is a movement in the broader industry where some managers or some of our peers had Article 8 to Article 9 strategies and are rethinking that. So, it's an interesting move to make, but again, the heart of SFDR is how do you provide high-quality decision, useful disclosures to your clients such that they can assess that you are actually doing what you're claiming to do in that promotion. How do we get comfortable given, there's no perfect picture? Given, there are slightly different levers that we pull or the slightly different priorities in terms of GSE factors, how do we think about that?

Mahesh Jayakumar: You are one of the key stakeholders among many at MFS in terms of realizing how do we respond to this regulatory ask of classifying our funds. It was great to work on this puzzle for emerging market debt. I'm overusing the word first principles but let me go back to that again. In the context of SFDR and fund labeling, we want to be authentic to our investment process. SFDR is not causing MFS to suddenly rethink how it invests money, thinks about active management or thinks about ESG. If ESG integration is natural to how we think about investing, which it is, then we should be able to meet this regulatory ask very easily in terms of your point in terms of demonstrating how we think about integration. That's exactly what we did. So, when we thought about the ask of how do you demonstrate ESG integration? Number one, "What are the things that are evident in terms of what you've promoted based on the holdings of your fund?" For example.

As we strived to answer these questions, it became very clear that given the very robust ESG materiality process and the pecking order that I talked about, the GSE, as you already mentioned, we should use that as how we think about answering this regulatory disclosure question, if you will. So, what we decided to do was we decided to show that our funds were basically solving for the ESG integration ask by measuring the countries whose bonds we own in the fund based on a combination of governance factors and social factors. We did that on purpose because, as I mentioned earlier, that you need good G to promote good S. They're both interdependent and interlocked. So, we decided to show that what does the governance profile look like of the various countries in our portfolio alongside what does the social profile look like, especially in terms of, in my mind and in the minds of my colleagues and the emerging market debt team, some of the most fundamental social aspects of ESG, which is health and education.

If a populace does not have access to either of those two, how can they be healthy? How do they contribute to the workforce? How do they contribute to the economy? Yes, you need good infrastructure, you need access to technology, you need the right platform, you need digital infrastructure, you need all that. But at the end of the day, the health and education aspect of the social pillar for sovereign is the most fundamental requirement for development. That's why you see many NGOs in the UN pay attention to vaccination programs, to attention to education programs. So, what we decided to do was, at a minimum, demonstrate in our portfolios how we think about health and education on the social side, as well as good governance and a combination of these factors, and therefore reflect that in the mix of countries whose bonds we buy, if you will. That's how we have decided to solve for this disclosure question from a European regulatory perspective.

Vish: You touched on it earlier, where the sovereign risk team or the EMD team have done the empirical analysis, have built sovereign risk models that embed, as part of them, amongst other fundamental considerations, the material governance issues, rule of law, strength of institutions, things like the social factors, health education, as well as pertinent climate factors, again, where appropriate. But if the models are telling us that those things are financially material and they're embedded in the way that the team is doing its analysis, then there's a perfect overlap of that Venn diagram, if you like, of what SFDR is really looking for, and it identifies a range of what they call principle adverse indicators and what we already do within the existing investment process. So, I think what you're saying is that our approach rests on whether those two circles of that Venn diagram . . .

Mahesh Jayakumar: Intersect. Exactly.

Vish: ... intersect. We could have easily taken either an exclusionary approach in terms of exiting[FK(1]  coal or another environmental risk, or we could have taken an approach that relied on third-party ratings, and much like our low carbon transition characteristic, this is all public information. We decided not to do that because again, it doesn't align with the belief that you outlined upfront.

Mahesh Jayakumar: The nuances . . .

Vish: Yeah.

Mahesh Jayakumar: ... and then the active approach to ESG that one has to take.

Vish: Yeah. Absolutely right. Okay. So that's great. So that's how we think through the sovereign risk profile. So thinking through some of those governance factors, social factors, and again, that doesn't preclude us from thinking about the pertinent and relevant material climate risks, but in terms of something like SFDR, where it's systematic in terms of what we're promoting across the platform, marrying what we already do and have already done in the sovereign risk models for some time pre-SFDR, to what SFDR is actually asking us to do in terms of our disclosure to clients, all it's really asking us to do is be better at more explicitly disclosing to our clients the types of risks and factors that we're taking into account, which is excellent. That's super helpful.

Just zooming out a touch, as you think about developed markets, you touched on this a little bit. People will pick up from the accent, and I'm from the UK, we've also had our governance issues over the last 6 to 12 months. How do you think about the nuances between emerging and developed markets? Is that a completely different animal, or are there similarities in terms of the way that you would weigh some of those issues?

Mahesh Jayakumar: It's the degree of impact if you will. All sovereigns need good governance and social stability. All sovereigns are exposed to either transition risk or physical risk. I think the big difference between EM and DM is, I would say, the difference in materiality of those factors. Good governance is something we take for granted, and for example, in the G7 or the G10 countries globally, that's number one. It's like you expect these countries to already have very stable political systems and governance factors, and that's why they're some of the richest in the world to begin with.

So, in the context of DMs, we tend to always focus on social factors and environmental factors. Let's think about environmental factors. Many of these very developed, rich countries have made climate pledges to either be net-zero at some point or decrease their national carbon footprints, and they have the means to do so. They have the funding to do so, they have the technology to be able to do it. So, understanding how these developed market countries are going to continue on their climate journey is a very important aspect of analyzing their ESG risk and return profile.

On the flip side, these same rich, developed markets are also promising to fund climate change mitigation, adaptation projects in the emerging market world. You can promise it, but how do you deliver that promise in a world of high inflation, civic unrest in your own land, increasing indebtedness? So, these are going to be the challenges for developed markets, they're some of the most indebted countries in the world, and yet they're being looked to deliver and solve globally on the climate puzzle by not only adapting themselves but also opening their checkbook to help emerging market countries.

Vish: Yep.

Mahesh Jayakumar: Many of these emerging market countries . . .

Vish: Wealthy.

Mahesh Jayakumar: ... are wealthy and are developing very rapidly on the development spectrum. So, I would say the difference in focus is that I think the time for focusing on E is already here for DM versus EM. Because for EM, they're at a lower stage of development, and good governance and social factors are an existential threat for them versus for DM. They've crossed the chasm if you will. They're at a bit higher stage of development, and now they need to think about what you exactly said, which is forward-looking risks and forward-looking factors, of which, of course, environmental and climate factors, and climate risk is the biggest risk of them all for these countries.

The other thing we need to think about is just how do we manage this high debt load in these countries with low economic growth. So, you have this crucible of very high inflation, low economic growth. What does that mean for developed market countries in terms of, again, like I said, keeping up their promises from a sustainability perspective? Are they simply going to give up and not do anything? Are they going to continue and persevere in spite of some of these challenges that we're seeing in terms of the economic shift that we're witnessing globally? So, these are some of the things that we tend to think about from a DM perspective. A little bit different from EM, but in summary, you could say that it's a difference in weighting of these pillars. It's a difference in how you think about which pillar is more important for DM or EM.

Vish: That's fascinating. It will be interesting when it comes to the crunch for DM. It will become, and we're seeing it already across many major markets, a more politicized issue. So, I'm going to start bringing us to a close, Mahesh. That was really, really interesting just to get your thoughts and go a little bit deep on and narrow on emerging market debt specifically. We might call you back to answer your own question, how do you think about, are they going to capitulate in a realm of high inflation, anemic growth in some of the more developed markets? There are some recent developments over the last year or so with what you're referencing, which is the just energy transition plans that some of the emerging economies have started to publish, and some of the developed markets have committed to putting their hands in their pockets.

They're yet to fully fund those yet. So, I think South Africa, this is again in the public domain. You can read South Africa's JETP, the Just Energy Transition Plan. I think they're asking for $9 billion. By their own assessment, they need $99 billion. So, it's about 10% of, actually, what they need, of which the US, Europe, UK has actually committed to fund a large proportion of that $9 billion and is yet fully, actually, commit capital because there's a war in Europe, there's an energy crisis, there's energy independence issues, and all sorts of geopolitical risks that I'm sure are pulling the attention and the dollars away from some of those commitments. So, it'll be fascinating to see this over the next few months and years, and it will start to interplay between . . .

Mahesh Jayakumar: Decades, I would say.

Vish: Yes. We're in a multi-decade old transition. So, the last thing, the one new feature for this season that you weren't aware of last time, is, I asked my previous guest to write a secret question for my next guest. So, you'll have the chance to reciprocate.

Mahesh Jayakumar: Okay.

Vish: So, a prior guest has written a secret question.

Mahesh Jayakumar: Okay.

Vish: I've written it here. You can have a look at it, and you can react live for us.

Mahesh Jayakumar: So let me read the question. It says, "Of all the criticisms you hear of ESG, which is the most valid?" I go back to this concept of losing nuance. ESG is not black or white. It's not dark green or light green. It's a continuum of green. You have to use judgment in terms of what ESG means to you as an investor and how you want to think about that ESG risk. Sometimes, the ESG community are too ideal in their goals. It's nice to have idealistic, lofty goals, but then you have to bang into reality and be pragmatic in terms of how you think about sustainability. I think that criticism of our community is very valid. You have to be adaptable, you have to change, you have to innovate, and you have to think about the changing dynamic conditions in the real economy as you think about sustainability.

I'm not trying to say give up and not do it. Please don't mind me saying, this is not an excuse for inaction. Not at all. I'm just saying we have to be very, very pragmatic in the face of the global challenges we as the ESG investment community face. It's an extremely daunting ask. There's no doubt about it. The amount of themes and risks within E, S and G is just daunting. No, we don't have all the answers yet. There are no blunt instruments and blunt tools to solve every problem that might come under the ESG umbrella. So, I asked my fellow ecosystem practitioners to not give up, do our best, yet adapt, adapt, adapt to changing conditions on the ground and in the markets.

Vish: Yeah, and be honest. Be honest . . .

Mahesh Jayakumar: Be honest and be transparent.

Vish: ... about the challenges . . .

Mahesh Jayakumar: Exactly.

Vish: ... about exactly some of the areas where we don't know what the answers are. I couldn't agree more. Maybe that links to the very last thing I want to ask you. I give some credit to a very good friend of mine in the industry who coined this term, which I've liberally stolen, which is a wisdom question, a wisdom which stands for what I should do differently on Monday. So, for our listeners, do you have any advice, any thoughts, or any practical, pragmatic advice on what they should do differently on Monday?

Mahesh Jayakumar:  Oh, okay. Let me think on my feet here. Maybe I'll apply it to myself and what I have been trying to do. I think we all need to take a few minutes away from our busy schedules to reflect and think, and I know you've been a big proponent of that, Vish, and I'm ashamed to say that I don't practice it enough, and I try to do that. I try to basically think about, "How can I reflect just for the rest of the week?" If you do it on Monday midday, Monday morning, or whatever, how can you take a few minutes away to reflect on where you are, what's ahead of you, and rejuvenate yourself?

If you can take any... You can call it whatever you want. You can call it introspection, meditation, prayer. It doesn't matter what term you use. But if you can do that, if you can take some time away, just take five minutes for yourself, reflect, pause, think, introspect. What an amazing way to live. I think those small moments start to build and lead up to incremental change and bigger moments for all of us. So, I think I'd encourage all of you to do that.

Vish: I agree. It's probably great when you can do that for the rest of your presence.

Mahesh Jayakumar: It's amazing.

Vish: Yeah, it's very powerful.

Mahesh Jayakumar: The more I do it, the more I fall in love with it. Why did I not do this when I was younger?

Vish: Yeah.

Mahesh Jayakumar: Why did I wait until I aged to do this?

Vish: The good news is you can develop that muscle extremely quickly. Mahesh, you've been an absolute delight. Thank you so much. . .

Mahesh Jayakumar: Thank you, Vish. Thank you so much for inviting me.

Vish: ... for taking the time to join us and illuminate those issues for us. We've really enjoyed it.

Mahesh Jayakumar: I appreciate it, thank you.

Vish: So that was Mahesh. Thank you for listening to this podcast. I hope you took something away from it. Mahesh was excellent at talking through some of the nuances, complexities of how we need to think about different asset classes in a slightly different way, and we focus this time on emerging market debt, a major asset class that's front of mind for seemingly many CIOs and asset allocators across the world. I thought it was interesting how Mahesh talks about how the bottom-up application of some of those first principles really matters and how that then translates into how we respond to client demand, industry trends, regulatory trends, et cetera. If you have any questions, comments, future guest suggestions, please email us at allangles@mfs.com. We would love to hear from you.

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