It is now projected that global corporate debt will rise from $52 trillion to $75 trillion by the year 2020, according to a financial analysis by ratings agency Standard & Poor’s.
Representatives from the S&P 500 told the Financial Times of the possibility of a doomsday scenario wherein there “would be a series of major negative surprises sparking a crisis of confidence around the globe.” The reps said these surprise events could destabilize the market enough to “result in credit growth collapsing as it did during the global financial crisis in 2009,” and that a “correction in credit markets is unaviodable.”
Global corporate debt is expected to rise to $75 trillion by 2020, according to their report obtained by the Financial Times. The challenge is to “prevent financial market volatility from reaching the real economy,” the analysts warned.
Two major risks are economic growth lagging behind corporate borrowing and a spike in U.S. “leveraged finance,” reports the Financial Times. (RELATED: European Bank To Hold Off Stimulus In Brexit Wake)
Central banks around the world are ardently pursuing expansionary monetary policy that is resulting in lower interest rates and even negative interest rates in Europe and Japan, reports the Financial Times, BBC, and Bloomberg. Investors out to profit from this proliferation of cheap money into the marketplace are alone expected to drive the demand for corporate borrowing to $62 trillion, reports the Financial Times.
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