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Wednesday, 13 December 2017

US companies face US$2trn debt refinancing by 2021: Moody's

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US companies will have to refinance a record US$2trn of debt over the next five years, with more than half of that coming from highly leveraged credits, Moody’s said on Wednesday.

Junk-rated borrowers have US$1.063trn coming due between 2017 and 2021 – split between US$633bn of bank loans and US$430bn of high-yield bonds.

Companies that have the most leverage, with a debt-to-Ebitda ratio of over six times, may have difficulty refinancing the US$319bn of maturing debt because of stricter regulations aimed at curbing leverage lending, the ratings agency said.

Bank regulators typically see leverage of over six times as problematic when reviewing bank loans.

Investment-grade companies, meanwhile, have US$944bn to refinance over the next five years, according to Moody’s.

The ratings agency said it expects bond issuance to accelerate in the second half of the year, as companies begin to refinance some of their longer term debt.

 

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