It is likely that the global companies with record net debt of $7.8 trillion use cash to pay some of it off as the economy slows and borrowing costs remain high.
That is the vision that Janus asset manager Hendersono which published in a report that corporate borrowing hit a record last year after companies, excluding financial ones, assume US$456.00Net 0 million in new debt.
(They prepare a measure that eliminates the fuel subsidy for large companies).
The total amount of outstanding debt is expected to fall by almost 2% this year, $7.65 trillionas companies seek to ease the impact of falling profits and higher interest rates.
(There are more people in trouble to pay their loans).
“For companies considering how to shape their balance sheets, higher rates have no doubt begun to dampen the appetite for lending.”, they say in the report Michael Keough and James Briggs, portfolio managers.
(The Ministry of Finance defended the compromise with the fiscal rule).
Higher rates are not taking much of the gain yet, due to the delayed impact of refinancing needs, but this will flow in for the foreseeable future, they added. Some companies have already started paying down debt, and Janus Henderson noted that the decision to do so will vary significantly between different sectors, and between the strongest and weakest companies.
(Expenditure, the red flag that sets off alerts in the Fiscal Framework).
The report showed that companies leisure and public services they stood out for having the highest debt-to-equity ratio, at 241% and 145%, respectively.
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By region, debt has grown fastest in North Americawhich has increased 56%, to $4.3 trillionsince 2016. The growth in Europe and the United Kingdom has been slower, while levels in emerging markets and in Asiaexcluding Japanthey fall.
Bloomberg
