INVESTMENT FOCUS-It's payback time for emerging markets' $1.6 trillion debt

viernes 11 de marzo de 2016 10:54 GYT
 

* Graphic on debt issuance, maturities: tmsnrt.rs/1Rb4n8S

By Karin Strohecker

LONDON, March 11 (Reuters) - Recent signs of stabilisation in emerging markets may merely be the calm before the storm - a $1.6 trillion debt mountain is due for repayment in the next five years, a steep rise in maturities that could stir fresh trouble.

The debt-servicing hump - with annual repayments jumping by more than $100 billion by 2020 compared with 2015 - is a result of a borrowing spree after the 2008 financial crisis.

From African governments to Turkish banks, developing world borrowers flogged their debt on hard-currency bond markets in post-crisis years, encouraged by near-zero U.S. interest rates that sent investors hunting for higher yields.

But it's payback time.

Almost $1.6 trillion is due for repayment from 2016 to 2020 with corporate debt accounting for more than three-quarters of the total, according to data from ICBC Standard Bank. For a graphic on emerging market debt issuance and maturities, see tmsnrt.rs/1Rb4n8S

Until now, a relatively light maturity schedule for company debt along with rock-bottom global interest rates have capped defaults in the $2 trillion corporate debt sector. But weak commodity prices, higher U.S. interest rates and above all, the sheer volume of repayments could make things tricky.

"The wall can't move out, and there are two reasons for that" said Bhanu Baweja, UBS head of emerging markets research.   Continuación...