In the same way, high levels of foreign-currency corporate debt could limit the scope for exchange rate adjustments to play a stabilizing role. Non-financial corporate debt is also a concern in some advanced economies. For instance, in the United States and the euro area, the quality of corporate debt has deteriorated.
We have seen substantial growth of BBB- and lower-rated bonds and a rapid increase in leveraged loans.9 Non-bank financial institutions have played the biggest role in the buildup of all this corporate debt since the crisis. That’s because global bank lending dropped off sharply as banks repaired their balance sheets and complied with stricter regulatory requirements.