Global corporate debt could grow by $ 1 trillion in 2020 Companies around the world could raise up to $ 1 trillion in total in 2020 as they try to bolster their position during the pandemic, according to Janus Henderson’s […]
Global corporate debt could grow by $ 1 trillion in 2020
Companies around the world could raise up to $ 1 trillion in total in 2020 as they try to bolster their position during the pandemic, according to Janus Henderson’s Debt Index..
If this forecast comes true, the growth of total global corporate debt will increase by 12% to about $ 9.3 trillion. As a result, the debt of a number of companies will be comparable to that of some countries..
The last year also saw a sharp rise in borrowing, fueled by mergers and acquisitions, as well as borrowing by companies to finance share buybacks and dividends.. But this year the leap will happen for a completely different reason, as the virus has hit the profits of almost all industries..
«COVID has changed everything. Now we are talking about preserving capital and strengthening the balance sheet, not making a profit», – said Seth Meyer, portfolio manager at Janus Henderson.
Companies actively used bond markets between January and May. In March, debt markets closed to all but the most reliable companies, but later became available again thanks to emergency corporate debt purchase programs from global financial regulators..
American companies owe almost half of the world’s corporate debt. The country has experienced the fastest growing economy in the past five years, with the exception of Switzerland, which has maintained its leading position through large deals M&A.
Germany ranks second in debt with $ 762 billion. There are three companies in the country that are included in the ranking of the most indebted firms in the world.
It should be noted that a quarter of companies in the new debt index do not have any borrowed funds at all, and some even have impressive reserves.. The largest of them ($ 104 billion) belongs to Alphabet.
Mayer pointed out that the loan market has not yet returned to pre-crisis levels. Investors are restrained by new cases of outbreaks in the US and fears of a second wave of the epidemic in the fall.