Emerging economies see debt rise $1 trillion in second quarter, face record redemptions: IIF

A man looks at an electronic stock quotation board outside a brokerage in Tokyo, Japan, November 13, 2018. REUTERS/Toru Hanai

LONDON (Reuters) - Emerging market debt rose by $1 trillion to more than $71 trillion in the second quarter, with China accounting for more than 80 percent of that increase, the Institute of International Finance (IIF) said in a report on Wednesday.

The latest numbers from China pointed to a continued issuance boom in the world’s second-largest economy, wrote IIF executive managing director Hung Tran.

GRAPHIC: Emerging Markets Redemptions -

“Data suggest that China’s total debt surpassed 300 percent (of GDP) in Q3 2018: robust foreign demand for Chinese bonds and the authorities’ efforts to support domestic activity have all contributed to this sharp debt buildup,” Tran wrote.

Developing economies also face record redemptions in the years to come with over $4 trillion of bonds and syndicated loans maturing by end-2020, with as much as a third of that denominated in foreign currencies, the IIF report found.

In Chile, Colombia, Egypt and Nigeria nearly 75 percent of redemptions coming due in that period are for dollar-denominated debt. Mexico, South Africa, Brazil and Turkey also face high dollar financing needs, the IIF said.

GRAPHIC: IIF Global Debt Q2 2018 -

Meanwhile, mature markets painted a different picture. Overall global debt levels declined by $1.5 trillion to $247 trillion in the second quarter of 2018, mainly driven by a decline in the financial and government sectors in developed markets, the IIF found.

“Against the backdrop of strong global growth and higher inflation readings across EM and some mature markets, this decline brought the global debt-to-GDP ratio down to 317 percent in Q2,” IIF wrote.

Reporting by Karin Strohecker, editing by Abhinav Ramnarayan and Hugh Lawson