The developing markets will have to payback a rising debt load as observers warn of slowing growth, especially out of China. The weaker emerging currencies will also make it harder to repay back debt for U.S. dollar-denominated debt in a strengthening USD environment. Moreover, borrowing costs are rising on expectations the Federal Reserve will soon raise rates.
“There’s clear stress in the market: Companies that have less-than-robust businesses and debt on their balance sheets are suffering and will continue to suffer,” Neil Macdonald, head of restructuring in Asia at Kirkland & Ellis LLP, told the Wall Street Journal.
Market Vectors EM High Yield Bond ETF
For more information on the fixed-income market, visit our bond ETFs category.
Max Chen contributed to this article.