<p>The Emerging Markets Bond Index (EMBI) is a widely recognized benchmark that tracks the performance of external debt issued by emerging market governments and corporations.</p>

<h2>How It Works</h2>
<p>The EMBI is maintained by J.P. Morgan and includes bonds denominated in various currencies, with maturities ranging from one to 30 years. It consists of two main indices:</p>
<ul>
  <li><strong>J.P. Morgan EMBI Global</strong>: Includes bonds issued by emerging market governments and quasi-sovereign entities.</li>
  <li><strong>J.P. Morgan EMBI Global Diversified</strong>: Excludes the most liquid and highly-rated sovereign issuers, providing broader exposure to emerging markets.</li>
</ul>
<p>Bonds are weighted by their market capitalization, and the index is rebalanced semi-annually.</p>

<h2>Why It Matters</h2>
<p>The EMBI is a crucial tool for investors seeking exposure to emerging markets. It provides a broad-based measure of emerging market bond performance, enabling investors to compare and track the performance of their portfolios against a benchmark. For example, during the 2008 financial crisis, the EMBI Global index declined by over 25%, highlighting the significant impact of global events on emerging market bonds.</p>