S&P Credit Shift: As Global Corporate Borrowers Seek $60 Trillion, Asia-Pacific Debt Will Overtake U.S. And Europe Combined

The emergence of China as the biggest debt market, gradual disintermediation of banks, faster debt growth in sectors benefitting from the rising global middle class, and an aging world population have resulted in major credit shifts in nonfinancial corporate debt issuance since the 2008 recession. We expect these shifts to continue through the next five years, as corporate issuers will likely seek up to $60 trillion in new debt and refinancing through 2018, an increase from an estimated $53 trillion last year. (Watch the related CreditMatters TV segment titled “Asia-Pacific’s Debt Will Outpace The U.S. And Eurozone As Global Funding Demand Rises,” dated June 16, 2014.)

Corporate credit globally has approached an inflection point as the center of gravity shifts to the Asia-Pacific region. Corporate debt in the region, particularly from China, will exceed that of North America and Europe combined by 2016. We believe this will lead to an overall increase in risk, since the credit quality of corporate borrowers in Asia-Pacific is generally lower than in North America and Europe. Consequently, without improved risk assessment among investors and a heightened awareness by regulators of contagion risk, some future financial stress could stem from Asia.

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About AIWMI

The Association of International Wealth Management of India (AIWMI) is a not-for-profit organization and a globally recognized membership association for finance professionals. AIWMI primarily focuses on the broad and strategic role of developing a more robust and forward-looking training infrastructure for the financial services sector and to promote more active industry involvement and collaboration in training and continuing education. AIWMI is offering advanced international certification programs along with a wide variety of high-quality executive education programs. AIWMI programs combine state-of-the-art knowledge and skills with practical experience and insights into the functioning of the financial sector. All AIWMI courses and educational events have an intense and pragmatic curriculum. Participants are exposed to the latest developments within the financial services sector. AIWMI plays a key role in guiding the development of the financial services sector. AIWMI works with key industry participants’ viz. the Government, the Regulators, the Industries/Associations, the Corporate, the Media and the General Public to achieve its objectives. Besides enhancing technical competence and professionalism in the industry, AIWMI organizes events and facilitates discussions to promote best practices in leadership and talent development in the financial sector with an aim to become Asia’s premier center of excellence for financial education.

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