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Emerging markets: a rising debt worry

Corporate debt in the US is back at 2007 highs, but it is emerging markets which fare the weakest in debt affordability.

The massive 200 per cent rally in the stock market since it bottomed out in 2009 is more on the scale of the late 1990s bull market, compared to the 2002-2007 rally of around 95 per cent.

INVESTOR concern about the rapid build-up of corporate debt is growing. Ultra-cheap borrowing costs created by loose monetary policy has led companies to aggressively releverage their balance sheets in the aftermath of the global financial crisis (GFC).

In this note, we assess whether we...