Scarce dollar funding and a retrenchment in bank lending will force up premiums for emerging market countries and companies refinancing debt next year, adding to strains on public finances and potentially triggering a surge in corporate defaults.
JPMorgan calculates that emerging sovereign debtors will need to find $63.6 billion to cover coupon and redemption payments in 2012, while corporates must raise $107 billion. Total issuance should be around $245 billion, the bank forecasts.
Such volumes would not usually portend difficulty — even this year, emerging bond issuance has been over $250 billion, not far off last year’s record. But with markets still awaiting a solution to the euro zone’s debt crisis, 2012 could be tough for entities that need to refinance debt, or secure new money.
JPMorgan calculates that emerging sovereign debtors will need to find $63.6 billion to cover coupon and redemption payments in 2012, while corporates must raise $107 billion. Total issuance should be around $245 billion, the bank forecasts.
Such volumes would not usually portend difficulty — even this year, emerging bond issuance has been over $250 billion, not far off last year’s record. But with markets still awaiting a solution to the euro zone’s debt crisis, 2012 could be tough for entities that need to refinance debt, or secure new money.
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