Which of the following is a characteristic of emerging market credit?

Many emerging market credits are indeed characterized by being government-owned or controlled entities. This is particularly true in regions where the state plays a significant role in the economy, often due to historical, structural, or policy factors. In many emerging markets, governments own a range of industries, from utilities to telecommunications, and these entities frequently issue bonds as a means of raising capital. As a result, investors often find a substantial portion of emerging market credit composed of these government-affiliated corporations, which can have implications for credit risk assessments and investment strategies.

In contrast, the other options do not accurately reflect the typical characteristics of emerging market credit. While some emerging market issuers may be rated investment grade, a significant number are not, leading to a diverse range of credit qualities. Emerging market bonds tend to offer higher yields compared to domestic bonds, but this is not strictly defining for all issuers, as many factors influence the yield. Additionally, the assertion that most emerging market credits are driven by technology startups does not reflect the broader landscape, which encompasses a wide array of sectors beyond technology. Hence, the correct understanding focuses on the prevalence of government-related entities in emerging market credit.