These Emerging Market Companies Are Being Stifled by $23 Billion Worth of Debt

A $23 billion pile of debt is stifling emerging-market companies already strained by the tumble in commodity prices to 16-year lows and weaker currencies.
The bonds in U.S. dollars, which come due before the end of 2016, have become more expensive to roll over or repay after the selloff triggered by China’s yuan devaluation this month sent yields soaring to close to the highest levels in four years. Brazil’s Petroleo Brasileiro SA and billionaire Carlos Slim’s Mexican wireless company America Movil SAB are among the 10 most-burdened borrowers, according to data compiled by Bloomberg.

As many companies avoid the extra cost, bond issuance has fallen 21 percent this year to the lowest since 2011, the data show. What’s more, currencies including Russia’s ruble, the South African rand, Brazil’s real and the Mexican and Colombian pesos have slumped at least 12 percent in 2015, driving up the cost local manufacturers would need to pay to settle their foreign-currency debts.
"It’s a difficult environment to print new bonds," said Trieu Pham, a credit strategist at Mitsubishi UFJ Securities International Plc in London. “Credit costs are edging higher and some companies might find it more difficult to issue new debt and repay existing debt.”
Companies in Brazil, whose largest trading partner is China, have the biggest bill at $8.1 billion, followed by firms in Russia with $6.8 billion.