S&P: Euro Cos. Need To Refinance $3.9 Trillion By 2012
June 19, 2009
If you thought the debt maturity wave hitting the U.S. is big, wait until you see what is about to hit Europe’s shores.
Companies there are facing $3.9 trillion in debt maturing through the end of 2012, according to Standard & Poor’s. Companies in the U.S. owe roughly $2.8 trillion in the same period.
“Refinancing risk remains a sizable challenge for European borrowers, particularly in the financial sector,” S&P analysts said in a report. “Moreover, an anticipated wave of sovereign bond issuance risks potentially crowding out private-sector borrowers, and drive refinancing costs higher.”
But even though the overall total is substantially higher in Europe than in the U.S., this wave will make less of an impact than the one hitting the U.S. This is because the lion’s share of debt, roughly 87% of it, maturing in Europe is investment grade. In the U.S., the figure is 55%.
Moreover, nearly €587 ($833 billion) out of the total European debt coming due are covered bonds, a market that has recently shown signs of improvement because of the direct purchase programs announced by the European Central Bank and the Bank of England, according to S&P.
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