Risky lending has increased to a level not seen since before the financial crisis, according to Ambrose Evans-Pritchard, international business editor for The Telegraph in the United Kingdom.

"This looks to me like 2007 all over again, but even worse," William White, former chief economist at the Bank of International Settlements (BIS), told the Telegraph.

The global financial system has become more unbalanced since the crisis, White noted.

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"The ultimate driver for the whole world is the US interest rate and as this goes up there will be fallout for everybody. The trigger could be [Federal Reserve] tapering but there are a lot of things that can go wrong. I am very worried that Abenomics could go awry in Japan, and Europe remains exceedingly vulnerable to outside shocks," he added.

Total public and private debt levels are 30 percent higher as a percentage of GDP in the advanced economies than they were before the financial crisis, and bubbles are bursting in emerging markets, said White, now chairman of the Organization for Economic Co-operation and Development's Economic Development and Review Committee.

The BIS in its latest quarterly report stated subordinated debt issuance has tripled to $52 billion in Europe and skyrocketed tenfold to $22 billion in the United States

"Historically low yields in core bond markets were an important underlying factor drawing investors towards the higher returns of riskier assets," the report stated.

"Leveraged" loans to low-rated, highly leveraged borrowers increased to a record 45 percent of the syndicated loan by mid-2013, 10 percentage points higher than shortly before the financial crisis, according to Evans-Pritchard.

Central banks boosted equities in developed countries this summer when they reassured markets they would continue accommodative monetary polices until recovery was on solid footing

"This led to a continuing squeeze of credit spreads and increased issuance of riskier bonds, a phenomenon reminiscent of the exuberance prior to the global financial crisis," the BIS explained.

The hunt for yield in a low-rate environment is fueling a return of risky loans in the form of complex securitized products such as collateralized debt obligations, agreed USA Today.

In the first half of 2013, $424 billion of asset-backed securities were sold, and $44 billion of collateralized debt obligations have been issued so far this year, which is on track for the biggest year since 2007, according to industry group SIFMA, USA Today reported.

"It's basically the same people doing the same things all over again, only more intensely," Brian Reynolds, chief market strategist at Rosenblatt Securities, told USA Today. "In the long term we should be worried."

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