Global corporate debt to reach $75 trillion

Global corporate debt is expected reach $75 trillion (€68.1 trillion) by 2020, fuelling fears that a correction to credit markets is unavoidable. S&P Global Ratings, which has made the estimate, said the credit correction began in late 2015 and will likely spread through the next few years as defaults spike. With central banks around the world engaging in expansive monetary policy that has seen interest rates turn negative in Europe and Japan, investors on the hunt for yield are expected to push global corporate borrowing demand to $62 trillion. The firm also warns that if unexpected events such as Brexit continue, there could be a rapid departure of both lenders and lower quality borrowers from the market, which would have a severe impact on high yield bonds as an asset class. Paul Watters, who co-authored the S&P report, said that it may be difficult for monetary authorities to prevent financial market volatility infecting the real economy. This is because the tools that central banks have at their disposal have reached the limit of their effectiveness. In terms of regions, China looks set to have the greatest share of global corporate debt at 43% whereas Europe, including the Eurozone and the UK will see its share ease to 16% from 20% in the next five years. ©2016 funds europe

Executive Interviews

INTERVIEW: ‘It is what it is’

Dec 22, 2016

Jeff Conway, regional chief executive for State Street, talks to David Stevenson about regulation and how the firm will handle the challenge of tech disruption.

MASHREQ CAPITAL INTERVIEW: A new direction

Dec 22, 2016

The new chief executive of Mashreq Capital talks to George Mitton about fund launches, management style and why he is the right person for the job.

Roundtables

SEC LENDING ROUNDTABLE: Both a borrower and a lender be

Jan 11, 2017

Industry heavyweights, including agent lenders, discuss issues affecting the securities lending sector such as regulation and the types of collateral being used.

EMERGING MARKETS ROUNDTABLE: The re-emergence

Jan 03, 2017

2016 was the year emerging markets returned to the spotlight, as they regained ground since the 2012 sell-off. Funds Europe asked our panel if this appetite will persist in 2017.