Report Predicts Massive Corporate Debt Maturities Load in Europe by end-2017
Approximately US$3.9 trillion in European financial and nonfinancial corporate debt that Standard & Poor’s (S&P) rates is expected to mature between 1 April 2013, according to the credit ratings agency’s (CRA) global fixed income research arm. The prediction was made in a published article entitled
‘European Refinancing Study: Nearly $4 Trillion Of Corporate Debt Is Expected To Mature By Year-End 2017.’
“Of this amount, US$737bn is scheduled to mature during the last three quarters of 2013, and, given normal data reporting lags, the credit market probably has already accommodated a significant portion of this amount,” said Diane Vazza, head of S&P’s Global Fixed Income Research.
The annual scheduled maturities will increase to US$982bn in 2014 and US$820bn in 2015 before declining to US$725bn in 2016 and US$676bn in 2017. Of the nearly US$3.9 trillion in maturing debt, financial companies account for two-thirds (US$2.6 trillion), and more than 85% (US$3.4 trillion) is investment grade (rated BBB- and higher).
“Although maturing debt from higher-rated companies tempers overall refunding risk in Europe, we believe that the continued uncertainty in the region, which stems from its weak economy and sovereign challenges, remains a concern for investors and could impede financing and refinancing prospects in the coming quarters,” said Ms. Vazza.
“Moreover, financial companies in Europe continue to face headwinds that not only complicate their capital raising efforts but also hinder banks from lending more freely to other companies.”