Asia corporate debt to top US$60 trillion as funding needs climb: S&P

MELBOURNE - Global corporate issuers will seek an estimated US$60 trillion in new debt and refinancing through 2018, with the majority of that growth and its attendant risks concentrated in the Asia-Pacific region, according to a new report from Standard & Poor’s Ratings Services. The report says Asia-Pacific debt will overtake US and Europe debt combined, suggesting that some future financial stress could stem from Asia, as China and its neighbours widen their lead over the US and Europe as the largest group of corporate borrowers in the world.

In a related report, S&P is projecting that disintermediation, or increased reliance on debt securities instead of bank loans for financing, will grow 3.5%, or nearly $3.1 trillion, by 2018.
 “The emergence of China as the biggest group of corporate borrowers, moderately increasing bank disintermediation, and faster debt growth in sectors related to the growing global middle class, are likely to drive global corporate debt issuance over the next four years,” said Jayan Dhru, Global Head of Corporate Ratings at S&P. 
“The US continues on the path to economic recovery while the Eurozone struggles with marginal growth, but the bottom line is that this is a China story. Higher risk for China's borrowers means higher risk for the world.”  www.standardandpoors.com (ATI).