Money managers and credit-ratings companies say the longer interest rates remain higher, the trickier this situation will get: For high-quality companies, it may take the form of a spike in interest rates, but for some of the lower-rated ones, it can mean failed refinancing deals, that may lead up to defaults or even bankruptcies.
Cracks are deepening for vulnerable emerging-market companies as global borrowing rates surge to the highest levels since the financial crisis, halting refinancing opportunities for US$400 billion worth of debt maturities coming due in the new year.
As US Treasury yields soar to 15-year highs and borrowing costs skyrocket, companies from developing nations have managed to only rollover a tenth of what they need. What’s more, the struggle may be in its beginning stages only as refinancing challenges are likely to worsen once another US$300 billion worth of corporate bonds comes due in 2025.
