Junk bonds, CLOs, EM debt 'increasing risks for investors'

ECONOMISTS are expressing increasing concern over risks posed by rising corporate issuance of high yield junk bonds, collateralised loan obligations (CLOs) and emerging-market debt.

According to estimates of data from the Securities Industry and Financial Markets Association and JP Morgan, US corporations issued US$181 billion of junk bonds in the first half of 2014 compared to US$336 billion in the whole of 2013 and US$329 billion in 2012.

In Europe, high yield bond issues amounted to 44 billion euros (S$72 billion) compared to 75 billion euros in 2013. In Asia and other emerging markets, US$170 billion of corporate bonds were issued in the first half of this year against US$360 billion in 2013.