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Emerging nations to increase borrowing by 4% this year: S&P

[NEW YORK] A group of developing nations with the highest estimated amount of outstanding debt in foreign and local currency will boost borrowing from long-term commercial sources by 4 per cent to US$1.2 trillion dollars in 2016, according to Standard and Poor's.

That will help push the total debt for the 20 economies to US$6.8 trillion total by year-end, up by US$587 billion from 2015. About half of the gross borrowing in 2016 will be to refinance maturing long-term debt, resulting in an estimated net loan requirement of US$562 billion, a 4.5 per cent increase, S&P said in a report Monday.

The rising debt burden is weighing on developing economies, which are also faced with weak growth and stagnant global trade. Central banks from Mexico to South Africa have raised borrowing costs to stem inflation, while capital outflows from China have prevented monetary authorities from cutting benchmark lending rates to prop up growth. Weak earnings and tighter lending conditions may make it more difficult for companies, including state-owned enterprises, to repay their debt, Bhanu Baweja, the head of emerging-market cross-asset strategy at UBS, wrote in a note earlier this month.

China is leading the increase in debt among emerging-market countries, accounting for 30 per cent of the estimated total borrowing. Brazil is second at 16 per cent and India is third at 14 per cent.

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The remaining 17 countries are Mexico, Poland, Argentina, Turkey, Egypt, Indonesia, Malaysia, Thailand, Russia, Lebanon, South Africa, the Philippines, Morocco, Hungary, Colombia, Venezuela and Pakistan.

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