UID:
edoccha_9958124135702883
Format:
1 online resource (19 pages)
ISBN:
1-5135-9962-3
,
1-5135-2307-4
,
1-5135-2049-0
Series Statement:
IMF Working Papers
Content:
In recent years, firms in emerging market countries have increased borrowing, particularly in foreign currency, owing to easy access to global capital markets, prolonged low interest rates and good investment opportunities. This paper discusses the trends in emerging market corporate debt and leverage, and illustrates how those firms are vulnerable to interest rate, exchange rate and earnings shocks. The results of a stress test show that while corporate sector risk remains moderate in most emerging economies, a combination of macroeconomic and financial shocks could significantly erode firms’ ability to service debt and lead to higher debt at risk, especially in countries with high shares of foreign currency debt and low natural hedges.
Note:
Cover -- Contents -- I. Introduction -- II. Rising Corporate Debt -- III. Rising Vulnerabilities -- IV. Stress Testing the Corporate Sector -- V. Impact on Banks -- VI. Policy Responses -- VII. Summary and Conclusions -- Appendix 1. Emerging Markets Corporate Debt Data -- Appendix 2. Interest Coverage Ratio and Debt at Risk -- Appendix 3. Descriptive Statistics of Corporate Balance Sheet Data and Ratios -- Appendix 4. Nonperforming Loans and Banks' Loss Absorbing Buffers -- References -- Figures -- Figure 1. Nonfinancial Corporate Debt Issuance and Rising Leverage, 2010-2014 -- Figure 2. Emerging Market Corporates: Weakening Credit Metrics -- Figure 3. Stress Tests -- Figure 4. Impact on the Banking Sector.
Additional Edition:
ISBN 1-5135-0271-9
Language:
English
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