Friday 28 January 2022

Refinancing risk on $1 trillion debt for EMEA firms eases

DUBAI, July 5, 2017

The refinancing risk for speculative-grade non-financial companies in Europe, the Middle East and Africa (EMEA) region has considerably fallen, with over half of the almost $1 trillion debt now due in 2022 and beyond as investors' continued strong appetite for higher yields pushes maturities further out, according to Moody's Investors Service.

The highest proportion of debt due in each year from 2018-21 is concentrated among Ba-rated companies, which account for more than half  of total refinancing requirements in each of the years for both bonds and  loans supporting upcoming refinancing needs, stated the top ratings agency.

The report "Speculative-grade non-financial corporates -- EMEA: Refinancing risk falls; lower-rated energy, telecoms companies are more exposed" is Moody's 12th annual study of the debt maturity profiles and refinancing needs for 547 publicly rated speculative-grade non-financial firms in EMEA.

Moody's pointed out that debt due within two years has decreased to around $220 billion or 22 per cent of total debt outstanding compared with $239 billion or 25 per cent of total debt in last year's study, further reducing upcoming refinancing risk.

The proportion of debt due within two years from lower-rated companies (i.e., Caa and Ca-rated) has not changed materially, having dropped slightly to $14.9 billion or 6.8 per cent of total outstanding debt in 2017 versus $18 billion or 8 per cent last year, it stated in the report.

"Refinancing has become less of a concern for EMEA's spec-grade companies, with $481 billion or 48 per cent of the $997 billion in total debt  outstanding due to mature in the next four years, down from 53 per cent last year. Some 52 per cent of debt outstanding is due to mature in more than four years' time, the highest proportion recorded since 2013," remarked Martin Chamberlain, the vice president and senior analyst at Moody's.

The ratings agency said the ability of lower-rated companies to refinance and push out their debt maturities has been mixed.

Some companies have benefited from investor demand for lower-rated bonds and loans which offer higher yields. Others have entered into a combination of debt for equity swaps and debt write-offs, in some cases with the subsequent withdrawal of ratings, it stated.

Energy companies are most exposed to refinancing risk, while the telecoms sector has seen the fastest growth of Caa-Ca rated companies with debt due in the next two years.

The amount of debt at risk issued by telecoms companies rose to $2.9 billion, or 20 per cent of all Caa-Ca rated debt due in the next two years, from 6 per cent ($1 billion) last year, it added.-TradeArabia News Service

Tags: Middle East | debt | Moodys | Refinancing Risk |

More Finance & Capital Market Stories

calendarCalendar of Events