Emerging Market Nonfinancial Corporate Debt: How Concerned Should We Be?

Abstract

Nonfinancial corporate (NFC) debt in emerging market economies (EMEs) has tripled since the global financial crisis (GFC), reaching roughly $25 trillion, or 112 percent of GDP, in mid-2016. In this note, we assess corporate vulnerabilities by looking at two common metrics related to debt-servicing capacity: leverage (the ratio of debt to equity), and the interest coverage ratio (the ratio of earnings to interest expense).