Low borrowing rates have traditionally permitted businesses to cover up flaws in their business strategies. Numerous debt-ridden businesses are suddenly faced with the uncomfortable prospect of trying to service increased interest bills with constrained cashflows as central banks boost rates to control growing inflation. We used the market indicator of companies from Ice’s Global High Yield index with debt trading more than 10 percentage points (1,000 basis points) above government bonds to compile our list of Companies with high debt and most indebted companies.
This yields a varied variety of 207 corporations whose bond spreads are flashing a red danger signal, despite the fact that it does not capture companies going to private debt markets or bank loans.
Chinese real estate corporations, which up until recently seemed to defy the laws of financial gravity, now dominate the top. However, the diverse group, which includes a French supermarket chain, an Irish aircraft lessor, an Indian miner, a Belgian toilet manufacturer, and Britain’s largest chicken producer, demonstrates how pervasive business turmoil has become in 2022. We have selected a sample of 35 businesses from the list to investigate further.
Bond investors are expert worry-warts, and when the economy is unsure, the market may reflect their worst fears. Many of the companies on the list have already delayed the day their debt becomes due far into the future, defying past predictions of their demise. Instead of a list of condemned enterprises, think of this as a tour of companies that the debt markets are worried about.