LONDON - Companies worldwide will take on as much as US$1 trillion of new debt this year to protect their finances during the coronavirus (COVID-19) pandemic, a new research has found.
The research, conducted by British asset management company Janus Henderson, studied 900 major companies and estimates that total global corporate debt will soar by 12% to around US$9.3 trillion this year.
“COVID has changed everything. It is about conserving capital and building a fortified balance sheet,” Janus Henderson portfolio manager Seth Meyer said on Sunday (12/7) as quoted from Reuters.
According to the research, US companies owe nearly half of the world’s corporate debt at US$3.9 trillion and have seen the fastest debt growth in the last five years.
Germany is ranked second in terms of corporate debt at US$762 billion. The country is home to three of the world’s most indebted companies including Volkswagen, whose debt of US$192 billion is only slightly below the national debt of countries like South Africa and Hungary.
Credit markets, Mr Meyer said, still has a long way to go to get back to pre-COVID-19 conditions as the recent increase of coronavirus infections, particularly in the US, remains a major concern among investors.
“It is all a recipe for a more challenged outlook than we thought two months ago,” he said. (MS)