A $111bn backlog of bonds that need to be refinanced over the next year has built up in the emerging market economies and raised the threat of defaults and company closures.

With the ability to raise money in the debt markets severely restricted because of the credit crisis, emerging market banks and companies could struggle to roll over the maturing debt, according to ING Wholesale Banking.

David Spegel, global head of emerging markets strategy at ING, said: "Many corporates and banks in the emerging markets are highly levered without cash to fall back on. These will struggle should they need to raise money in the markets.

"The bond and loan markets are much harder to access now, and it could get worse, which means there will be defaults."

Of the $111bn in bonds that will mature between now and the end of 2009, $24bn worth are held by junk-rated groups that have almost no hope of tapping a market that has become averse to risk.

Emerging market bond issuance has fallen steadily this year. Only $330m worth of bonds have been issuedin September compared with $10bn as recently as July. In August last year, issuance averaged about $20bn a month, according to ING.

Continued at Financial Times