The corporate debt market is an important part of the global economy. It is a source of capital for businesses, and it can be a source of risk for investors. In this blog post, we will explore the latest corporate debt statistics, and what they mean for businesses and investors.
We will look at the size of the corporate debt market, the types of debt available, and the trends in corporate debt issuance. We will also discuss the potential risks and rewards associated with investing in corporate debt. Finally, we will examine the implications of these statistics for businesses and investors.
Corporate Debt: The Most Important Statistics
South Africa's national debt is estimated to increase by 63.32% over the next 5 years, reaching 409.13 billion U.S. dollars in 2027.
Companies borrowed a record $1.3 trillion last year, resulting in a 10.2% increase in total debt to a record $13.5 trillion, but only a marginal increase in net debt to $8.3 trillion due to a cautious approach to spending.
Corporate Debt Statistics Overview
Corporate debt issuance has skyrocketed in 2020, with $2.28 trillion of bonds and loans issued, and an additional $1.56 trillion issued through September.
This has pushed the total nonfinancial corporate debt and loan market to approximately $11 trillion, and companies are taking advantage of the record low interest rates of 3.6% and 5.7% for investment-grade and speculative-grade bonds, respectively.
80% of U.S. corporate debt is rated as investment grade, while only 3 trillion is rated as speculative grade.
The majority of corporate debt in the U.S. is considered to be of high quality and unlikely to default. This is important for investors, as it indicates that investing in corporate debt is a relatively safe option.
South Africa's national debt is estimated to increase by 63.32% over the next 5 years, reaching 409.13 billion U.S. dollars in 2027.
9.2% (or R146 billion) of government expenditure in 2016/17 was used to pay interest on debt, more than what was spent on the hospital, tertiary education and housing functions.
This highlights the potential financial burden of servicing debt, and the need for governments to be mindful of their debt levels in order to ensure that they are able to meet their other financial obligations.
Companies borrowed a record $1.3 trillion last year, resulting in a 10.2% increase in total debt to a record $13.5 trillion, but only a marginal increase in net debt to $8.3 trillion due to a cautious approach to spending.
This shows that companies are taking a more cautious approach to spending, which is likely to have a positive effect on the global economy. It also suggests that companies are not taking on too much debt, which could lead to financial instability.
Central banks have allowed countries to borrow at a rapid pace, resulting in a hefty price tag of $19.5 trillion last year alone.
It could have a significant impact on corporate debt levels, as governments may be unable to pay back their loans, leading to increased defaults and a higher debt burden for corporations.
China's corporate debt levels have reached an all-time high of nearly 290% of GDP, with government debt making up the largest share of total debt in both the U.S. and Japan.
Corporate debt levels have increased significantly in China, and the government debt is the largest contributor to total debt in the U.S. and Japan. This is important to know because it can help inform policy makers and investors of the risks associated with corporate debt levels in these countries.
China has accounted for one-third of global GDP growth over the last decade, while its share of global credit to the non-financial sector has increased from 8% to 20%.
This could lead to a decrease in demand for commodities, a drop in global equities, and an increase in credit spreads and investor uncertainty.
97% of 205 major companies in the US and Europe have recovered to or exceeded their 2019 revenue levels in 2021.
Despite the economic downturn caused by the pandemic, most major companies have been able to recover and reach pre-pandemic revenue levels. It suggests that the corporate debt market has been able to remain stable and that companies have been able to access the debt they need to finance their operations.
Without additional aid, economic recovery will be slow and local economies will have a large impact on the national discussion.
The slow economic recovery and the impact of local economies on the national discussion will affect the ability of corporations to pay back their debt. If the economy is slow, corporations may not have the resources to pay back their debt and this could lead to an increase in corporate defaults.
Conclusion
In conclusion, corporate debt is an important factor to consider when evaluating the financial health of a company. Corporate debt can be a useful tool for businesses to finance their operations, but it can also be a source of risk if it is not managed properly.
By understanding the current corporate debt statistics, businesses can better assess their financial situation and make informed decisions about their debt management strategies.
References
1 - https://www.rbcwealthmanagement.com/en-us/insights/is-the-us-corporate-debt-mountain-something-to-worry-about
2 - https://www.statista.com/statistics/1277336/corporate-debt-rating-type-usa/
3 - https://www.statista.com/statistics/531946/national-debt-of-south-africa/
4 - https://www.statssa.gov.za/?p=11983
5 - https://www.reuters.com/business/finance/corporate-net-debt-seen-rising-companies-spend-pandemic-cash-piles-2021-07-06/
6 - https://www.bloomberg.com/graphics/2021-coronavirus-global-debt/
7 - https://www.cnbc.com/2021/06/29/china-economy-charts-show-how-much-debt-has-grown.html
8 - https://www.ecb.europa.eu/pub/economic-bulletin/articles/2022/html/ecb.ebart202202_01~48041a563f.en.html#toc3
9 - https://www.statista.com/statistics/1337028/revenue-recovery-covid-19-industry/
10 - https://www.naco.org/articles/measuring-economic-recovery
