Corporate Debt To Surge by Another $1 Trillion, Says Janus Henderson Investors

July 14, 2020 (EIRNS)—Even before the pandemic began to wreak havoc with corporate balance sheets, company debts were soaring to new highs, according to the new annual Corporate Debt Index from Janus Henderson (JHCDI). Net borrowings around the world surged to a record $8.3 trillion in 2019, an increase of 8.1% year-on-year.

The companies JH looked at issued an additional $384 billion in bonds between January and May, an increase of 6.6% compared to the end of December balances. Borrowing from banks has also increased sharply, though precise figures were not yet available as of its writing July 13. Janus Henderson estimates net borrowings overall will jump by up to $1 trillion this year, an increase of 12%.

More than half of the companies in Janus Henderson’s index took on more borrowing in 2019, but a very large impact was made by relatively few of them. Just 25 companies between them borrowed an additional $410 billion last year, equivalent to one-third of the increase in borrowings of all those companies that added to their debts.

The most indebted company in the world is Volkswagen—its $192 billion net borrowing is not far behind the sovereign debt of South Africa or Hungary, though this is inflated by its large car finance business. Janus Henderson found, however, not all companies borrow. A quarter of the companies in Janus Henderson’s index have no debt at all, and some have vast cash reserves. The biggest of these stands at $104 billion and belongs to Google’s owner Alphabet.