With the banking and sovereign debt crisis in Europe growing ever worse by the day, the Telegraph has come up with another scary story to help put things in perspective. While the focus has been on sovereign and banks, companies need to rollover debt has largely gone below the radar but there is a requirment over the next 4 years for over $43 trillion.
Just as you thought things couldn’t get any worse, credit markets are about to be hit by a veritable tsunami of maturing corporate debt. Standard & Poor’s estimates that companies in Europe, the US and the major Asian economies require a combination of refinancing and new money to fund growth over the next four years of between $43 trillion and $46 trillion. The wall of maturing debt is unprecedented, raising the prospect of further, extreme difficulties in credit markets.
With the eurozone debt crisis still at full throttle, the Chinese economy slowing fast and a still tepid US recovery, it’s not clear that the banking system is in any position to deal with this incoming wave of demand.
In its analysis of the refinancing challenge, S&P concedes that it might just about be possible for the banking system to cope with the wave of corporate debt maturities, assuming no further deepening of the eurozone crisis. But providing the $13 trillon to $16 trillion of new money to spur growth is going to be a much bigger ask, especially in Europe.
Source: The Telegraph