Rush For Risk Raises Instability Fears
The quest for yield has been at its most frenetic in the corporate bond market, with a growing share of the action taking place in emerging markets.
To grasp the extent to which the corporate bond market has migrated to the developing world and how bond market risks are accumulating it is worth scouring a new report from the Organisation for Economic Co-operation and Development*, which builds on a unique data set of more than 100,000 individual bond issues in 108 countries.
While companies in the OECD economies remain the biggest issuers, the strongest increase in bond issues by companies has been outside the OECD area. Between 2000 and 2013 emerging market companies increased the total raised through bond issues nearly 15-fold to $467bn, of which $356bn related to China, Russia, Brazil, India and Mexico. In fact, more companies from non-OECD countries were issuing corporate bonds than from the US at the end of the period.
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