Corporate Borrowing in Emerging Markets: Fairly Long Term, but Only for a Few

Juan Jose Cortina Lorente, Tatiana Didier Brandao and Sergio Schmukler

No 130976, Research and Policy Briefs from The World Bank

Abstract: It is generally believed that firms in emerging markets rely on shorter-term instruments than firms in advanced economies. In recent years, firms in emerging market economies have substantially increased the amount of debt raised in global bond and syndicated loan markets, triggering concerns about their exposure to rollover risks. However, new evidence examined in this policy brief shows that emerging market firms have been using these markets to borrow long term, possibly diminishing the risks associated with higher debt levels and foreign currency financing. Challenging the conventional wisdom, large firms from emerging markets have issued bonds and syndicated loans at maturities similar to those issued by firms from advanced economies. These findings have implications for understanding the sources of short-termism in emerging markets, the actual risks emerging economies face from rising levels of corporate borrowing, and the policy measures that may help firms that cannot borrow long term.

Keywords: Capital Markets and Capital Flows; Capital Flows; Economic Conditions and Volatility; Macroeconomic Management; International Trade and Trade Rules; Economic Growth (search for similar items in EconPapers)
Date: 2018-10-01
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