Asia dollar-denominated bonds have dropped below par for the first time since 2011 as investors pull money out of the region amid concerns that growth is slowing and as currencies from the rupee to rupiah plunge.
Companies sold the least amount of bonds in a decade this month as concern Europe’s sovereign debt crisis will slow the global economy drove up relative borrowing costs by the most since the aftermath of Lehman Brothers Holdings Inc.’s collapse.
The tax regime that’s been the backbone of the Eurobond market since its inception 50 years ago is now threatened by the same regulatory overhaul driving corporate borrowers to issue bonds rather than take bank loans.
The amount of debt globally has soared more than 40 percent to $100 trillion since the first signs of the financial crisis as governments borrowed to pull their economies out of recession and companies took advantage of record low interest rates.
A drop in the euro to near its lowest level in four years means Canadian dollars and Swiss francs are accounting for record shares of global bond sales as investors flee turmoil in Europe’s government debt market.
Investors are complaining that the European Investment Bank doesn’t deserve the same exemption from losses on its Greek bond holdings as the euro region’s central bank because it didn’t buy the notes to support monetary policy.