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Emerging-Market Debt in Peril on Tight Fed, Morgan Stanley Says

  • Big shifts in U.S. rates, dollar brings risk: Morgan Stanley
  • Chile, Malaysia, Brazil, Mexico are among countries affected
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The Biggest Risks Facing Bond Markets

Policy makers in emerging markets should be hoping the Federal Reserve continues on its path of gradual interest-rate rises as some are exposed to any sharp increases in the U.S., according to Morgan Stanley.

The exposure is a result of substantial external debt linkages. Most emerging-market external debt -- 20 percent of gross domestic product -- is denominated in a foreign currency, with the largest component being corporate debt in U.S. dollars.