Pain ahead for S-EA firms with overseas debts

Singapore

SOUTH-EAST Asia's penchant for overseas borrowing is storing up pain for years ahead with companies facing record bond repayments just as local currencies slump.

Thirty-eight per cent of bonds sold by Indonesian, Malaysian, Philippine and Thai companies this year have been in foreign currencies, up from 27 per cent in 2014, data compiled by Bloomberg show. Companies face US$45 billion of bond repayments in greenback, euros or yen in the coming five years, breaking records set after the 1997 Asian Financial Crisis, when economists Barry Eichengreen and Ricardo Hausmann coined the term "original sin" to describe the dangers of overseas borrowing.

Strategists surveyed by Bloomberg see Indonesia's rupiah dropping 6 per cent by the end of next year and Malaysia's ringgit losing 3 per cent on higher US interest rates, a Chinese economy that shows no signs of picking up and commodity-price weakness. Bank of America Merrill Lynch's Original Sin index shows Indonesia's vulnerability at the highest level in a decade, while Malaysia's is riding at double the long-term average, after both governments turned to gl…