Summary of Corporate Financing Trends and Balance Sheet Risks in Latin America

Taking Stock of “The Bon(d)anza”

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Corporate Financing Trends and Balance Sheet Risks in Latin America summary
Latin American companies have been enjoying a “bon(d)anza” in global debt markets. Should investors worry?

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Companies in emerging economies are increasingly tapping global bond markets, and investors around the world have been enthusiastic buyers. While Latin American corporations have benefitted from this trend – especially because of their region’s low internal savings and investment rates – concerns over excessive leverage and currency risk are on the rise. Those old enough to remember the 1980s Latin American debt crisis will be particularly interested in this broad overview of more recent borrowing patterns from International Monetary Fund economists Fabiano Rodrigues Bastos, Herman Kamil and Bennett Sutton. getAbstract recommends their work to global investors, analysts and financial advisers.

In this summary, you will learn

  • Why companies in Latin America are increasing their global bond issuance
  • How changes in the borrowing habits of these companies are affecting their balance sheets and credit quality
  • What impact these trends could have on investors
 

Summary

Spurred by excess global liquidity, strong investor appetite, reduced bank lending and good macroeconomic conditions, Latin American corporations are raising more debt in global markets. But as quantitative easing ends in the United States and interest rates increase, Latin American borrowers may face...
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About the Authors

Fabiano Rodrigues Bastos, Herman Kamil and Bennett Sutton are economists at the International Monetary Fund.


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