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S&P Global Ratings

Global Corporate Debt Market: The State of Play in 2019

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Global Corporate Debt Market: The State of Play in 2019


- By dollar amount, outstanding global corporate debt instruments rated by S&P Global Ratings grew by 3% in 2018--to $19.5 trillion as of Jan. 1, 2019.

- This debt--which includes bonds, notes, term loans, and revolving credit facilities--is predominantly (78%) rated investment grade ('BBB-' or higher).

- Most of this debt is from nonfinancial companies with $12.56 trillion; financial services issuers accounted for the other $6.95 trillion.

- The majority of this rated debt ($12.8 trillion) is denominated in U.S. dollars.

May. 09 2019 — While financing conditions tightened in the U.S. and Europe in the fourth quarter of 2018, companies issued more new debt than they repaid during the year, and the amount of global corporate debt instruments outstanding rated by S&P Global Ratings rose by 3%. This marked a slowdown from 2017, when the stock of outstanding debt grew by 9%. Tightening monetary policy in the U.S., slowing economic growth globally, escalating trade war tensions, and Brexit-related uncertainty all contributed to the slowdown in global issuance in 2018. Despite the Fed's announced pause in rate hikes, we expect that many of these headwinds will continue to challenge financing conditions in 2019.

For this report, we looked at the state of play of the global corporate credit market in 2019 by estimating the dollar-equivalent volume of currently rated debt and segmenting by rating, sector, instrument type, and other variables. We show the rating distribution by the dollar amount of currently outstanding debt, whereas in many of our other reports we typically report on the distribution by issuer tally. Chart 2 shows rated debt by dollar amount of outstanding debt instruments compared with the number of rated issuers, and the appendix includes the distribution of global corporate ratings by issuer count over time.

The 'BBB' rating category accounts for the largest share of rated corporate debt with $7 trillion (36% of the global corporate rated debt). By issuer count, 1,877 issuers globally are rated in the 'BBB' category, accounting for 26% of global corporate ratings. Nearly 73% of the 'BBB' category corporate debt is from nonfinancial companies, while the financial services issuers account for the remaining 27%.

Within investment-grade ratings, the 'BBB' category's share is even larger, with the largest shares of both investment-grade issuers (52%) and investment-grade debt (46%). Investors are increasingly wary of the rising concentration of 'BBB' debt within the investment-grade range. However, 25% of this 'BBB' category debt is rated 'BBB-', which is one-notch above speculative grade ('BB+' or lower). The majority of 'BBB' category debt is multiple notches above speculative grade.

In terms of issuer count, the 'B' category has the highest number of rated corporate issuers with 2,098 issuers (29% of the total) globally. Despite the large number of issuers in this rating category, 'B' rated debt accounts for a much smaller share of total rated corporate debt at $1.83 trillion (9.4% of the total).

Speculative-grade issuers tend to be smaller, with lower revenue and less debt outstanding than investment-grade issuers. By issuer count, 50.2% of the global corporate issuers are rated speculative grade, but by dollar amount, just 22% of rated debt globally is speculative grade (see Chart 1).

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