* Emerging debt spreads tighten below 300 bps, lowest since
Aug. 2011
* Chinese stocks weigh on EM stocks with fall of 2 pct
* Russian, Polish CDS narrowest since Aug. 2011, Russia on
bond roadshow
By Philip Baillie
LONDON, March 14 (Reuters) – Emerging sovereign debt
spreads tightened to their narrowest since August on Wednesday,
as a stronger U.S. growth outlook emboldened investors venturing
into riskier markets, though a poor performance in Chinese
stocks curbed emerging equity gains.
Emerging debt spreads have tightened 70 basis points
this year below the psychologically key 300 bps level, following
a second round of cheap funding released from the European
Central Bank.
These cheap loans have made higher-yielding riskier assets,
including emerging sovereign debt, more attractive to investors
as they use the money for carry trades.
Investor sentiment for emerging stocks was also boosted by
the Federal Reserve’s description of the U.S. economy late on
Tuesday as “expanding moderately”, compared to a “modest” growth
tag used in its January statement, a sign that a further round
of easing (QE3) is now less likely.
“We have had a very strong run in U.S. economic data and
euro zone data have started to improve, but we are probably in
for a period of slower gains in emerging markets,” said Manik
Narain, emerging markets strategist at UBS.
Continued…
