Lates News

The average borrowing cost for emerging market companies has dropped to the lowest level relative to U.S. corporations since January, as global bond investors diversify into high-yield assets, pushing the sector's performance ahead. The divergence in trends has pushed the yield premium of emerging market corporate bonds relative to U.S. corporate bonds to the lowest level since January 26. Allen Shaw of Ninety One noted that the strong performance of emerging market corporate bonds is primarily driven by three factors: oil companies helping to fill the supply gap caused by conflicts in the Middle East, duration-related technical factors, and a widespread influx of funds into high-yield varieties. Shaw, co-head of emerging market corporate bonds at Ninety One, stated that this asset class is still underweight. The strong performance year-to-date and attractive relative risk-adjusted returns provide an interesting opportunity for asset allocators.