Average borrowing costs for emerging-market corporates have fallen to their
lowest level relative to US corporates since January as global bond investors
diversify into higher-yielding assets, driving outperformance. The split has
pushed the yield premium of EM corporate debt over US corporate debt to its
lowest since Jan. 26. Alan Shaw, co-head of emerging-market corporate debt at
Ninety One, said three factors are behind the rally: oil companies filling
supply gaps from the Middle East conflict, duration-related technicals, and fund
flows into high-yield assets; he added the asset class remains underweight and
that strong YTD returns and attractive risk-adjusted returns make it an
interesting allocation opportunity.
