Sign up to create alerts for Instruments,
Economic Events and content by followed authors
Free Sign Up Already have an account? Sign In
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Quotes
All Instrument Types
- All Instrument Types
- Indices
- Equities
- ETFs
- Funds
- Commodities
- Currencies
- Crypto
- Bonds
- Certificates
Please try another search
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details
OECD flags record $4 trillion corporate bond refinancing in next three years
© Reuters. OECD flags record $4 trillion corporate bond refinancing in next three years
PARIS (Reuters) - Corporate bond issuers face having to roll over a record amount of debt in the coming years amid declining investor risk appetite and falling credit quality, the OECD said on Monday.
Non-financial companies will have to pay back or raise fresh debt worth more than $4 trillion in the next three years, the Organisation for Economic Cooperation and Development said.
To put that into perspective, it was close to the balance sheet of the United States Federal Reserve, the Paris-based policy forum said.
Despite a drop in net issuance last year, a decade of companies gorging on debt amid record low interest rates in many countries has pushed the amount of debt on companies' books to record levels.
As of the end of last year, global outstanding corporate debt issued by non-financial companies stood at $13 trillion, the OECD said.
That's even after net issuance dropped 41 percent last year to the lowest volume since 2008, which was just as the global financial crisis was getting under way.
"Importantly, net issuance of non investment grade bonds turned negative in 2018, indicating a reduced risk appetite among investors," the report said. "The only other year that this happened over the last two decades was in 2008."
Rating's agency Standard & Poor's said earlier this month that issuance was facing headwinds from rising interest rates in the United States and Europe, uncertainty around Brexit and slower growth in China and many developed countries.
While companies have grown increasingly dependent on debt over the last decade, the quality of the bonds they have issued has broadly fallen.
The share of bonds rated BBB - the last rung on the ratings scale before junk status - stood at nearly 54 percent, the highest in records going back to 1980, the OECD said.
Against that background, corporate bond issuers in advanced and emerging countries are facing the highest repayments since 2000 in the coming three years, the OECD estimated.
"In a rising rate environment, when issuers' refinancing needs arise, borrowing costs will inevitably increase," the report said.
Related Articles
Year-end view for Fed policy rate rises again as recession risks remain - Reuters poll
By Reuters - May 19, 2022
By Prerana Bhat and Indradip Ghosh BENGALURU (Reuters) - The U.S. Federal Reserve will lift interest rates higher by the end of this year than anticipated just a month ago,...
IMF urges Asia to be mindful of spillover risks from tightening
By Reuters - May 19, 2022
TOKYO (Reuters) - Asian economies must be mindful of spillover risks as a decade of unconventional easing policies by major central banks is withdrawn faster than expected,...
Japan April consumer prices post biggest jump in over 7 years
By Reuters - May 19, 2022
By Daniel Leussink TOKYO (Reuters) - Japan's core consumer inflation in April rose above the central bank's 2% target, hitting a more than seven-year high as increases in energy...
Add Chart to Comment
Confirm Block
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.
Report this comment
I feel that this comment is:
Comment flagged
Thank You!
Your report has been sent to our moderators for review
Add a Comment
We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
Enrich the conversation, don’t trash it.
Stay focused and on track. Only post material that’s relevant to the topic being discussed.
Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.