Report Forecasts $53 Trillion Global Corporate Debt Funding Need Over The Next Five Years

May 15, 2013, 09:11 ET from Standard & Poor's

NEW YORK, May 15, 2013 /PRNewswire/ -- Standard & Poor's Ratings Services is forecasting that China's outstanding nonfinancial corporate debt will catch up and surpass the U.S.'s over the next two years, to make the country the largest corporate debt borrower globally. The credit rating agency published this information last night in a report titled  "The Credit Cloud: China Will Leapfrog The U.S. In The Race For $53 Trillion In Corporate Funding."

The report can be found at: A CreditMatters TV video segment on the topic is available at:

"There is a shifting balance in the regions in terms of refinancing debt and raising new money, with Asia-Pacific poised to outpace U.S. and eurozone funding needs, and China catching up and surpassing the U.S. in terms of outstanding debt," commented Jayan Dhru, senior managing director and head of the global Corporate & Government Ratings group at Standard & Poor's Ratings Services.

"We expect the debt needs of China, with its higher nominal GDP growth rate, to reach $18 trillion over the next five years ending 2017--a significant share of the estimated $53 trillion of global refinancing and new money requirements over this period," said Mr. Dhru.

According to the report, Asia-Pacific continues to lead the way among global regions in terms of financing requirements for nonfinancial corporate borrowers. North America is second, bolstered by a strengthening U.S. economic recovery, as evidenced by improving housing, employment, and consumer sentiment metrics. Meanwhile, financing needs in the eurozone are relatively subdued as the continent struggles with only marginal economic growth at best. While there has been a pickup in Latin America, led by Brazil, the region's share remains comparatively small.

"While downside risks exist, such as credit rationing from Western banks and a potential Chinese economic correction, our base case assumes that the banks and capital markets will be able to handle these 2013-2017 refinancing and new funding requirements," noted Mr. Dhru.

Standard & Poor's also plans to release four related articles later this week on the corporate funding needs of specific regions, including Asia-Pacific, North America, the eurozone and U.K., and Latin America.

Standard & Poor's Ratings Services, part of McGraw Hill Financial (NYSE: MHFI), is the world's leading provider of independent credit risk research and benchmarks. We publish more than a million credit ratings on debt issued by sovereign, municipal, corporate and financial sector entities. With over 1,400 credit analysts in 23 countries, and more than 150 years' experience of assessing credit risk, we offer a unique combination of global coverage and local insight. Our research and opinions about relative credit risk provide market participants with information and independent benchmarks that help to support the growth of transparent, liquid debt markets worldwide.


SOURCE Standard & Poor's