Rather, the concern has been that as the household sector takes on ever-more debt relative to its income, the risk of medium-term problems increases. This is especially so when this debt is taken on in an unusually low-interest rate environment.
The turbulence prompted investors to demand higher risk premia on a wide variety of securities. Securities issued by emerging-market countries were affected, and the CMA was no exception. Accordingly, the spread of debt instruments issued by CMA governments over “risk-free” US Treasuries have widened.