* Emerging stocks down almost 1 pct on risk aversion
* Polish zloty slips 0.5 pct as investors book profits
* Argentina unveils debt swap; more emerging issuance seen
By Sujata Rao
LONDON, April 16 (Reuters) - Emerging stocks posted their
biggest one-day fall in a month on Friday after weak U.S jobs
data raised questions over the pace of economic recovery, but
emerging bond issuance continued unabated.
Emerging assets have been fairly resilient to worries about
Greek debt amid good growth data in China and the developing
world, a raft of strong corporate results, and the likelihood of
low interest rates in the core markets for some time to come.
Analysts said markets were taking a breather before the
weekend after a strong run of recent gains that saw investors
push emerging equities up over 3 percent since the start of
April and absorb huge amounts of new bond issuance including
from higher-risk names Ukraine and Dubai.
MSCI emerging equities fell 0.9 percent, edging away from
the previous session's 19-1/2 month highs <.MSCIEF> while most
emerging currencies pulled back against the dollar and the euro.
"There's clearly some profit-taking but markets have done
pretty well in recent days. Google's results, which came after
hours, beat expectations but investors may be reacting to the
performance of the shares before the results," said John Lomax,
head of emerging equity strategy at HSBC in London.
"The outlook is positive," he added.
On currencies, the Polish zloty fell half a percent against
the euro, <EURPLN=> underperforming its regional peers as
investors stayed wary of more central bank intervention
following its action in the currency markets last week.
The country's finance minister said on Thursday that Poland
may need to continue intervening. []
Data showing consumer inflation slowing in March was also
zloty-negative, but the currency remains one of the best
performing emerging currencies this year, with gains of almost 6
percent.
"Everywhere people are selling risk and that is affecting
emerging markets," one currency trader said. "The zloty is seen
as more vulnerable after the intervention and now, the verbal
intervention .... people are rushing to protect profits."
A stronger dollar forced the Turkish lira off its highest
levels in almost three months <TRY=>. Investors have been piling
into the lira following a moderation in the central bank's
ultra-dovish stance, with some expecting a rate rise by June.
The lira is up almost 3 percent since the start of April.
BONDS ON A ROLL
On bond markets, Argentina announced a long-awaited debt
swap, offering new bonds and cash to holders of $20 billion in
defaulted debt, but investors saw the deal as less generous than
expected. [].
The deal is expected to have a high take-up rate however and
could pave the way for the country to return to global capital
markets. Argentina credit default swaps failed to react, quoted
at 12.6 percent on an upfront basis.
Emerging sovereign bond spreads over U.S. Treasuries rose 2
bps as Treasury yields fell but Argentine spreads fell 7 bps.
Emerging debt markets are seeing a heavy issuance surge,
with sovereigns as well as corporates trying to get funding done
while core yields remain low and risk appetite high.
Russia wraps up its roadshow next week and fund managers
said it may issue $7-$10 billion in two or three tranches in
what will be its first bond in a decade.
But less desirable credits are also in demand. State-run
entities from Dubai and Ukraine, where quasi-sovereigns recently
restructured debt, successfully tapped markets this week.
Kazakstan's Kazmunaigaz picked banks for a dollar bond.
Both Ukreximbank and Dubai's DEWA paid significant 120-180
bps premiums over the sovereign, the likely reason why DEWA's $1
billion bond got $11 billion in orders. Ukreximbank's $500
million issue was eight times subscribed, sources said.
"The market is looking for yield but yields are low in
general and we have to invest somewhere," one fund manager said.
That view was backed up by data from EPFR Global which
showed inflows into emerging bond funds at a weekly record of
$1.8 billion. Click on [].
But others expressed concern.
"I am getting really concerned at the feeding frenzy
rebuilding again... as investors dash to get a slice of new
issues, and especially as these seem to be moving back down the
credit curve in the hunt again for yield," Tim Ash, RBS head of
emerging European research, said in a note.
(additional reporting by Sebastian Tong; editing by John
Stonestreet)
