Dollar strength exposes cracks in Asian emerging-market debt

As coronavirus ravages, weak currencies threaten hundreds of billions in bonds

Some $1.4 trillion worth of U.S. dollar-denominated bonds are outstanding from Asian countries, with more than half of that from China, according to Dealogic. © Reuters

NARAYANAN SOMASUNDARAM, Nikkei Asian Review chief banking and financial correspondent

March 30, 2020 12:15 JST

HONG KONG -- The resilient U.S. dollar and the resulting weakness in emerging-market currencies amid the coronavirus pandemic is increasing the risk of default on Asian companies' corporate debt, potentially triggering a wider credit crisis.

About $115 billion in Asian emerging-market debt is set to mature this year and $200 billion next year, according to data from Dealogic. The dollar's 7% climb this month against a basket of currencies and a 243-basis-point blowout in Asia ex-Japan credit spreads could complicate the task of refinancing, and analysts are predicting that some stretched companies will have to seek restructurings with bond holders.