I know it's not
the sort of thing that people talk about when they are focused on what band-aid-cum-can-kicking "solution" authorities
are going to come up with in the next 24 hours, but even if by some miracle
they sort out the current round of problems, just look at what's waiting for
us in the wings:
"Treasurers
Face $46 Trillion Financing Cliff" (CFO.com)
A massive
amount of global corporate debt matures in the next four years, and
it’s causing treasurers to refocus their efforts on securing access to
credit.
A measure of
the scale of the refinancing problem is revealed in a recent report by
Standard & Poor’s Ratings Services. S&P suggests there is as
much as a $46 trillion “credit overhang” — the amount of
money corporates will need to raise between 2012 and
2016 to refinance their soon-to-mature debts and to fund capital expenditure
and working capital growth.
The combination
of bank balance-sheet restructuring, a euro zone crisis, a softening U.S.
recovery, and the prospect of slower growth in China could make for what
S&P calls “a perfect storm” in credit markets.
S&P’s working assumption is that “global banks and debt
capital markets will largely be able to continue to provide the majority of
liquidity to allow most corporate issuers to proactively manage their
forthcoming refinancings.” However, S&P
warns, “the balance is fragile” and there is the threat of
financing disruptions “even for borrowers that are not highly
leveraged.”
New money
requirements from 2012 to 2016 could be as much as $2.3 trillion in the euro
area and the United Kingdom, $3 trillion in the United States, almost $10
trillion in China, and $1 trillion in Japan. (Those numbers assume corporate
debt grows at 1.2 times the rate of GDP over the next five years.)
Added to this
are estimated refinancing needs of $8.6 trillion in the euro area and the
United Kingdom, $8.6 trillion in the United States, $7 trillion in China, and
$5.8 trillion in Japan.
But then again,
it's only money, right? If we need more, we can just print it.
Michael J. Panzner
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