Sunday , November 18 2018
Home / Constantin Gurdgiev: True Economics / 29/10/18: Corporate Credit and the Debt Powder Keg

29/10/18: Corporate Credit and the Debt Powder Keg

Summary:
As it says on the tin: despite growth in earnings, the numbers of U.S. companies that are struggling with interest payments on the gargantuan mountain of corporate debt they carry remains high. The chart does not show those companies with EBIT/interest cover ratio below 1 that are at risk (e.g. with the ratio closer to 0.9) for the short term impact of rising interest rates. That said, the overall percent of firms classified as risky is at the third highest since the peak of the GFC. And that is some doing, given a decade of extremely low cost of debt financing.Talking of a powder keg getting primed and fused…

Topics:
[email protected] (Constantin Gurdgiev) considers the following as important: , , , , , , ,

This could be interesting, too:

[email protected] (Constantin Gurdgiev) writes 17/11/18: Nine in Ten in the Red: Asset Markets YTD Returns Signal Risk Repricing

[email protected] (Constantin Gurdgiev) writes 16/11/18: Student Debt Hits Another High in 3Q 2018

[email protected] (Constantin Gurdgiev) writes 16/11/18: The Horsemen of the Financial Markets Apocalypse

Lance Roberts writes Weekend Reading: Why This Isn’t “THE” Bear Market…Yet


As it says on the tin: despite growth in earnings, the numbers of U.S. companies that are struggling with interest payments on the gargantuan mountain of corporate debt they carry remains high. The chart does not show those companies with EBIT/interest cover ratio below 1 that are at risk (e.g. with the ratio closer to 0.9) for the short term impact of rising interest rates. That said, the overall percent of firms classified as risky is at the third highest since the peak of the GFC. And that is some doing, given a decade of extremely low cost of debt financing.

Talking of a powder keg getting primed and fused…

29/10/18: Corporate Credit and the Debt Powder Keg

Leave a Reply

Your email address will not be published. Required fields are marked *