EM Debt: Ebb And Flow

March 2004 | Market Strategy

Over the past year or so, spreads on high yielding EM hard currency bonds have seen dramatic compression. Indeed, it could be argued that in the context of investors' hunger for yield, bond prices may have overshot and there is significant potential for downward adjustment. However, despite the perceived risks, the asset class has held up fairly well. One key factor underpinning investor appetite has been the absence of US interest rate rises in the face of conflicting evidence of recovery in the American economy. ndeed, yields in the G7 remain comparatively unattractive vis-à-vis the EM universe. Another factor

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