However, the total amount of emerging market debt fell to $96.2 trillion, from $98.7 trillion in the previous quarter. Meanwhile, the global debt/GDP ratio fell for the sixth consecutive quarter, to 343% of GDP.
Skyrocketing energy and food prices have continued to push interest rates higher and financing costs globally, while governments have increased spending to prop up economies.
Borrowers saddled with high yields have seen their spreads widen by about 400 basis points on average this year, but the increase has been less for investment-grade borrowers, according to the IIF.
“As global financial conditions tighten, access to international markets has become even more challenging for many high-performing borrowers this year,” Emre Tiftik, the IIF’s director of sustainability research, wrote in the report.
The higher cost of debt service payments could especially hurt countries most exposed to the effects of climate change, the IIF said.
An agreement reached at the COP27 talks in Egypt over the weekend he pointed to the creation of a “loss and damage” fund to help the poorest countries finance the impact of climate disasters, while highlighting the need to reform international financial institutions.
The IFF indicated in its quarterly report that, despite a reduction in dependence on dollar debt in recent years, it remains at high levels in Latin America and Africa, “leaving many countries strongly exposed to fluctuations in currency markets”.
Source: Ambito
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