From domestic power to international subordination: the uses and impact of corporate bond issuance in emerging capitalist economies

Abstract

This article focuses on the increasing trend of corporate bond issuance by the nonfinancial sector in emerging capitalist economies (ECEs). Contrary to prevailing views that ECE firms predominantly engage in speculative carry trade operations, our analysis, informed by firm-level data, indicates a strategic utilisation of bond proceeds particularly for financial strengthening through a reduction of short-term debt and interest expenses, as well as an extension of debt maturities. Noteworthy is the concentration of bond issuances in two extractive industries, ‘energy and power’ and ‘materials’. By integrating the subordinate financialisation and leverage as power frameworks, this study sheds new light on the strategic financial actions of ECE firms, who, while enhancing their domestic dominance, also reinforce the subordinate position of their home countries.