Key Charts - Size and Structure
Latin America’s Position in Global Leverage
- One interesting corner of global leverage story is the rise in Latin American issuance of international corporate debt. Latin America’s share of global issuance has been surprisingly substantial, rising from USD $62 to $242 billion since the 2008 crisis.
- LatAm companies can mitigate the FX risk that comes with this increased leverage by naturally matching their FX assets and liabilities, as well as financially hedging their exposures.
- Since 2008, LatAm derivative turnover has risen from $3 billion to $6 billion for interest rate derivatives, and from $28 billion to $67 billion for FX derivatives. What’s more, at least half of LatAm corporate debt denominated in FX is issued by sectors that are more accustomed to hedging FX exposures, such as commodities and energy exporters.
Sources: Bloomberg, Milken Institute.