Corporate Defaults In Emerging Markets Hit Six-Year High

MoneyTips

The worldwide economic slowdown has begun to take a toll in yet another arena of worldwide finance: the default rate of corporate debt in emerging markets. Companies from emerging markets are defaulting on their debt at a rate of 3.8% — the highest level since 2009. Through November 2015, that represents an increase of 40% over 2014. For reference, U.S. companies defaulted at a rate of 2.5% over the same time period.

There has been a complete reversal from just four years ago, when U.S. companies were defaulting on loans at a 2.1% rate while the emerging market default rate was down to 0.7%. The U.S. was just embarking on a relatively slow recovery while emerging market economies were growing at close to 7%, buoyed by tremendous growth in China. Stimulus efforts in the U.S. and other developed nations kept interest rates extremely low, driving more bond investments toward corporate bonds of emerging markets in search of higher returns.

As a result, emerging marke…

Get A Personal Loan Here. Apply NOW.