Photographer: Qilai Shen/Bloomberg

The $1 Trillion Debt Boom That's Making Emerging Markets Safer

Developing-nation borrowers are raising more money in local markets than ever before, making them less vulnerable to moves in U.S. Treasury yields, according to Mirabaud Asset Management Ltd.

Local-currency bond sales in emerging markets this year exceeded $1 trillion, almost triple the amount raised in the same period last year and dwarfing the $160 billion in hard-currency issues, according to data compiled by Bloomberg. Domestic sales have increased almost five-fold in the past five years.

Local Funding

Emerging markets depend less on external financing as local debt issuance booms

(Source: Bloomberg)

*Data shows year-to-date sales for 2018 and comparative period for other years

“The dependency on external borrowing in emerging markets has collapsed,” said Daniel Moreno, the London-based head of global emerging-market debt at Mirabaud. “The government and corporate sectors are less vulnerable to external shocks because they now finance themselves for the most part in their own currencies.”

Sales in the Chinese renminbi accounted for more than half of local-currency bond sales, the data shows.

    Before it's here, it's on the Bloomberg Terminal. LEARN MORE