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Worrisome Signs Series: High corporate debt levels and rate hikes from Fed

When the Federal Reserve says that they are going to hike rates by as much as 75 basis points, the one thing that should worry every investor is the level of debts gorged by companies since the Great Recession of 2008/09.

The net debt to earnings before interest, tax, depreciation and amortization (EBITDA) for non-financial corporations for High-Yield companies are currently above 4 percent, which is higher than the previous peak in 2001. The ratio for the lower investment grade corporate is currently just below 2.5 percent, which is above the 2008 peak and just shy of that of 2001. For higher investment grade corporates the ratio is just around the 2001 peak at 2 percent. Currently, the dollar denominated debt around the world stands at $52 trillion, which is almost three times the size of the US economy. A 75 basis points increase in the interest rate would lead to an additional burden of additional $390 billion on those debts, which is larger the GDP of Norway.

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March 28 21:00 UTC Released

KRBOK Manufacturing BSI*

Actual

78 bln $

Forecast

Previous

79 bln $

March 28 19:00 UTC Released

ARTrade Balance*

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-122 mln $

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-106 mln $

March 28 23:50 UTC 1212m

JPRetail Sales YY

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0.5 %

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1.0 %

March 29 06:00 UTC 382382m

DEImport Prices YY

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7.0 %

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6.0 %

March 29 06:00 UTC 382382m

DEImport Prices MM

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0.3 %

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0.9 %

March 29 06:45 UTC 427427m

FRConsumer Confidence

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100 bln $

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100 bln $

March 29 08:00 UTC 502502m

ITWage Inflation MM*

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Forecast

Previous

March 29 08:00 UTC 502502m

ITWage Inflation YY*

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Forecast

Previous

March 29 08:00 UTC 502502m

ITConsumer Confidence

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Forecast

Previous

106.6 %

March 29 08:00 UTC 502502m

ITMfg Business Confidence

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Forecast

Previous

106.3 %

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