* MSCI benchmark index drops 0.2 pct, India weighs
* Hungarian forint falls 0.6 pct vs euro
* SP downgrades outlook on Ukraine credit rating
By Philip Baillie
LONDON, March 16 (Reuters) – Emerging sovereign debt
spreads tightened back towards their narrowest in seven months
on Friday as investors sold U.S. Treasuries for riskier assets,
while modest budget reforms in India to tackle a ballooning
deficit weighed on emerging stocks.
Emerging sovereign debt spreads tightened back below
the key 300 basis point level to 298 bps, heading for their
narrowest end to the week since August as investors unwound
safe-haven government bond holdings, pushing up 10-year yields.
“The market is absorbing a rise in the U.S. bond yield curve
over the week which has been the main story – but I don’t think
that we are out of the woods yet,” said Luis Costa, emerging
market strategist at Citigroup.
Emerging markets bonds saw inflows of $1,437 million last
week, according to EPFR, with around $822 million moving into
hard currency debt and $445 million into local currency paper.
In emerging equities, the MSCI benchmark emerging stock
index fell 0.2.
Continued…
