S&P Global sees global corporate credit demand growing over the next few years, to $62 trillion by the end of the decade, including some $24 trillion in “new” debt (as opposed to refinancings).
At the same time, borrower credit quality is weakening , thanks largely to “monetary expansion” in various countries.
This combination of factors leads S&P to a pair of scenarios, with the assumption that a credit correction of some kind is inevitable:
- A slow burn, where weak companies fall over gradually (this is the base case assumption)
- “Crexit”: A system-wide credit contraction, prompted by a series of economic/political shocks. Brexit, for instance … – Tim Cross
The full report, Global Corporate Credit: Despite An Inevitable Credit Correction, Debt Demand Will Swell To $62 Trillion Through 2020, is available to S&P Global Credit Portal Subscribers. It was written by Terry Chan, Diego Ocampo, David Tesher, and Paul Watters. It details:
- Global corporate credit demand, by country
- New corporate credit demand
- Corporate credit growth cycle
- Debt/GDP vs Credit growth
- Financial risk trends of global corporate sample
- Distribution of FFO/debt risk categories, by country/industry
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