The ballooning edifice of corporate debt securities across the world is of ever lower quality and potentially more dangerous than it was at the outset of the Lehman crisis, the OECD club of rich nations has warned.
Global issuance of company bonds has doubled to $13 trillion over the last decade and standards have deteriorated dramatically, raising the risk of “fire sales” and a self-feeding chain reaction in times of stress.
“In the case of a downturn, highly leveraged companies would face difficulties in servicing their debt, which in turn, through higher default rates, may amplify the effects,” said a detailed report by the OECD’s corporate finance division.
“Any developments in these areas…
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