Emerging nation debt at all-time high

Oct. 14, 2004 at 2:25 PM
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LONDON, Oct. 14 (UPI) -- Borrowing by emerging market governments and companies has exceeded last year's record high, it was reported Thursday.

With two months to go, emerging market bond issuance has reached $331.4 billion in 2004, exceeding last year's total of $320.2 billion, the Financial Times said.

The bumper supply of debt is partly because borrowing costs for emerging market issuers are approaching an all-time low.

While analysts point out that credit quality in emerging markets has risen dramatically since the 1998 Russian debt default, risks remain for some of the high-yielding issuers.

Budget and current account deficits in emerging market economies have fallen since the 1997 Asian crisis. But, there are still risks that these economies would be hit hardest by oil price rises and any slowdown in the global economy.

"The biggest risk is fears of a U.S. recession," said Jonathan Bayliss, head of quantitative strategy at J.P. Morgan.

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