Sustained economic growth and high rates of savings provide Asian firms with an ample pool of domestic financing. However, firms have also ramped up overseas borrowing through bank loans and offshore bond issuances by their foreign subsidiaries. Emerging markets have absorbed massive outflows from advanced economies, driven by investors’ search for yield. Non-financial corporate debt scaled by GDP is highest for economies with internationally integrated capital markets, such as Hong Kong, China; Singapore; and the Republic of Korea. A sharp reversal of capital flows constitutes a risk for emerging markets whose corporate sectors are leveraged internationally and may end up facing an unfavorable combination of interest rate, rollover, and currency risks. Non-financial corporate distress easily transmits to the financial sector through its holdings of a significant share of corporate bonds, and also indirectly via asset devaluation.