News Daily Spot: Facing emerging markets credit risk of unpleasant surprises in 2016.

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Facing emerging markets credit risk of unpleasant surprises in 2016.

Barclays notes that it is quite rare that this phenomenon occurs without sovereign debt crisis, which is currently absent in developing countries. 

But the unusual confluence of a slowdown led by China, just as the West is rebounding, creates all sorts of tremors exchange and interest rates, which have plunged the prices of raw materials and overstated the declines in local currencies, in line with a slow pace of dollar interest rates. 

Such defaults horizon is worrisome given the scale of the accumulated debt and the fear of an emerging credit adjustment related capital outflows in the last two quarters, estimated by JPMorgan in an unprecedented total of 570,000 million dollars. Almost two thirds of that amount came from China. 

The accumulated debt has been a growing source of anxiety for global regulators. In late September, the International Monetary Fund warned that the quadrupling of corporate debt of emerging markets in the last decade, to a record $ 18 billion, required careful monitoring while coming to an end the era of interest rates low.

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