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Global Credit Research - 08 Feb 2017
New York, February 08, 2017 -- An all-time record $2 trillion of US corporate debt comes
due in the next five years, Moody's Investors Service says
in its new published reports. Both speculative-grade corporations
with over $1 trillion and Investment-grade firms with close
to $1 trillion are facing record amount of debt maturities.
Meanwhile, the rating agency's one- and three-year
refunding indices are currently below their historical norm, indicating
that the market's capacity to absorb upcoming maturities is below
"Five-year speculative-grade refunding needs have
reached a new high, breaking the $1 trillion mark,"
says Moody's VP-Sr Analyst, Tiina Siilaberg.
"US spec-grade non-financial companies have a total
of $1.063 trillion of debt maturing between 2017 and 2021,
with $933 billion, or nearly 90%, of this due
Moody's expects issuance in the primary market to accelerate in
the second half of 2017 as companies begin to address their longer-term
maturities. Speculative-grade maturities are comprised of
$633 billion of bank credit facilities and $430 billion
of high-yield bonds, with the former up 9% and the
latter up 17% over last year's numbers. Collateralized
loan obligations (CLOs) issued before 2017 by themselves won't be
sufficient to cover speculative-grade refunding needs, particularly
in 2021, when $402 billion of debt comes due.
Close to 60% of speculative-grade companies with debt due
in the 2017-21 time frame are in sectors with stable outlooks,
while 24% have positive industry outlooks and 16% have negative
outlooks, Moody's says. Among sectors with a stable
outlook, the telecommunications industry has the highest amount
of debt maturing before 2021, $81 billion, and among
those with a negative outlook, manufacturing has the highest amount
with $59 billion.
Companies with debt leverage in excess of six times are expected to have
$319 billion of debt maturing in 2017-21. These companies
could face higher refinancing risk due to stricter application of the
federal Leverage Lending Guidelines on large, regulated banks.
And while high-yield-bonds typically fall into the single-B
rating category, a significant percentage of bonds coming due in
2017-21 fall into either the Ba or "Caa1 or below"
rating categories. Meanwhile, only 8% of the bank
loans coming due in 2017 are rated Ba, compared to 51% last
US investment-grade non-financial companies have approximately
$944 billion of bonds due in 2017-21, also a record
amount, with maturities roughly evenly distributed over the period.
The telecommunications, technology and media sector continues to
dominate investment-grade maturities, with 31% of
the total, up from 29% from last year.
Baa-rated instruments account for the largest share, or about
half of all corporate investment-grade debt coming due before 2021,
while the proportion of maturities in the lowest investment-grade
rating category, Baa3, is up 2% from last year,
reflecting somewhat weaker credit quality in the cohort.
"For the majority of US investment-grade companies,
refunding risk over the next five years is manageable," says
Siilaberg. "Some 75% of firms holding maturing debt
have either positive or stable rating outlooks, while 77%
of total investment-grade debt coming due is held in industries
with either positive or stable industry outlooks" added Moody's
Analyst, Natalia Gluschuk.
The energy sector accounts for about $117 billion of the investment-grade
debt maturing in 2017-21, with about $70 billion held
by companies in Moody's lowest broad investment-grade rating
category, which could present challenges. While commodity
prices have improved, Moody's says, the operating environment
for energy and mining companies remains somewhat difficult.
Moody's research subscribers can access "Refunding Risk and
Needs 2017-2021: Speculative-Grade Corporations --
US: Record $1 Trillion of Spec-Grade Debt Matures
in Next 5 Years" at:
And "Refunding Risk and Needs 2017-21: Investment Grade
Corporates -- US: Investment-Grade Maturities Near $1
Trillion" is available at:
NOTE TO JOURNALISTS ONLY: For more information, please call
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This publication does not announce a credit rating action. For
any credit ratings referenced in this publication, please see the
ratings tab on the issuer/entity page on www.moodys.com
for the most updated credit rating action information and rating history.
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
MD - Corporate Finance
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
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