Emerging market countries, notably in Asia, are proving to be among the most active international borrowers this year as well as the leading depositors in overseas banks, the Bank for International Settlements said yesterday in its quarterly report.
The BIS, which acts as a central bank for national central banks, said the issuance of international debt securities remained robust in the second quarter of the year, bolstered by a recovering global economy and an easing in investor concern about the impact of higher interest rates.
New debt issuances surpassed repayments in the April to June period by US$348 billion (285.2 billion euros), although that figure was overshadowed by the US$521 billion in net issuances in the first quarter.
The report also predicted that "corporate borrowing could pick up in the near future" in response to a slowdown in corporate profit growth.
"With profit growth now beginning to slow, corporations' borrowing requirements are likely to increase if the rebound in capital investment, which began in mid-2003, persists."
It noted that debt carried in commercial paper by non-financial corporations in the US and the eurozone had recovered in the first half of next year.
Overall, however, new borrowing by companies in the US, Europe and Japan was described as "restrained" in the first half of the year. US corporate bond issuance was down 15 percent compared with the same period last year, while in the eurozone it was 40 percent weaker.
That trend was offset by activity in emerging market countries, according to the report, where "the pace of borrowing ... in international bond and syndicated loan markets showed no sign of slowing, with US$23 billion raised in July alone."
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