Will U.S. Corporate Borrowers Clear Refinancing Hurdles?
About $480 billion of corporate debt is coming due this year, with another $568 billion maturing in 2011. Standard & Poor’s provides its perspective in this Q&A, which is available for complimentary download from the Alacra Store.
Selected Excerpts:
- We expect investment-grade nonfinancial issuers–with almost $93 billion due in 2010–to have little trouble refinancing.
- High-rated financial issuers, also, will likely have little trouble rolling over debt in the near term.
- Perhaps our biggest concern starts with debt maturing in 2012. We see significant refinancing hurdles for (speculative grade debt), considering that approximately $850 billion in debt comes due for these low-rated borrowers from 2012 to 2014.
In short, we think renewed investor appetite in the credit markets has simply helped some highly leveraged companies to delay defaulting and muddle through what we think will be a year of half-speed economic recovery.
Questions addressed in the report:
Is the amount of upcoming debt maturities for U.S. borrowers–both corporate and financial, as well as investment-grade and speculative-grade–as daunting as it looks?
With banks looking to trim loan risk from their balance sheets, how important will the market for collateralized loan obligations (CLOs) be for refinancings?
When can we expect speculative-grade borrowers to start to get squeezed?
Are the lowest-rated companies merely delaying the inevitable?
The full report is available free of charge to Research Recap users for 30 days by special arrangement with Standard & Poor’s, an Alacra content partner. After 30 days, the report will revert to its regular Alacra Store price of $500.00)
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