Emerging-Market Borrowing Costs Rise the Most in Three Months

By Laura Cochrane
March 6 (Bloomberg) -- Emerging-market borrowing costs rose, heading for the biggest weekly increase in three months, on signs the U.S. recession is deepening, while China indicated it wouldn’t increase its stimulus plan and the European Union rejected an aid package for eastern Europe.
The extra yield investors demand to own developing nations’ bonds instead of U.S. Treasuries climbed 3 basis points to 6.96 percentage points, according to JPMorgan Chase & Co.’s EMBI+ Index. That brings the weekly increase to 47 basis points, the most since the first week of December.
The U.S. probably lost more jobs in February than at any time since 1949, economists said before a report today, a plunge that may crimping spending and hurt developing nations that rely on the world’s biggest economy to sustain exports. China’s Premier Wen Jiabao said yesterday the country’s growth target is within reach, indicating the government won’t increase its $585 million spending plan. The EU rejected a plea from Hungary for 180 billion euros ($228 billion) for eastern Europe on March 1.
“The U.S. payrolls are a major driver for the whole world,” said Simon Quijano-Evans, a Vienna-based economist at Credit Agricole Cheuvreux. “Global risk aversion is increasing and central and eastern Europe is a high-risk zone. There is little differentiation at the moment.”
The so-called yield spread on Turkey’s bonds increased to a three-month high, adding 18 basis points to 6.47 percent at 9:58 a.m. in London, JPMorgan data show. A basis point is 0.01 percentage point.
Emerging-market stocks fell 0.2 percent, extending the weekly decline in the MSCI Emerging Markets Index to 2.4 percent.