MAS raises the alarm over escalating local debt

Corporate debt-to-GDP ratio hit 78% in Q2.

The Monetary Authority of Singapore today raised the alarm over the spike in local debt. In its annual Financial Stability Review, the MAS stated that the corporate debt-to0GDP ratio hit 78% in the second quarter, up significantly from just 52% in Q2 2008.

The report further noted that the household debt-to-income ratio has also edged up from 1.9 times in 2008 to 2.3 times in 2013.

“An interest rate hike combined with an earnings shock could increase the number of financially distressed corporates and households,” the MAS stated.

The MAS also said that still-elevated property prices and increasing cross-border banking exposure also warrants close attention. 

“MAS is monitoring the above risks closely and taking pre-emptive measures to address them,” it said.