Tags: Wall | Debt | Maturity | corporate

Report: Dangerous Wall of Debt Maturity Is Crumbling

Tuesday, 24 Aug 2010 03:24 PM

U.S. financial markets are on their way to knocking down a wall of debt maturity that has endangered the U.S. economic recovery and threatened to push more companies into bankruptcy, according to an investment firm report on Tuesday.

Companies must refinance at least $375 billion in debt over the next five years, according to Morgan Joseph LLC's second quarter financial restructuring outlook. The specter of companies defaulting en masse has worried investors even as bankruptcy attorneys have geared up for a busy few years.

But that mountain of debt is much lower than two years ago as lenders agreed to extend favorable terms rather than forcing repayments. It is expected to crumble more as companies including formerly bankrupt plastics maker LyondellBasell Industries NV have sold high-yield "junk" bonds to raise cash to repay loans.

"The maturity wall may not be the doomsday liquidity event once projected," the investment firm said.

In the last 18 months, loans due in 2011 have been almost entirely addressed, the firm said. Loans due the following year have been cut in half, it said.

"Accordingly, the current pace of refinancing and amend-to-extends demonstrate the ability for the market to address the wall of maturities," according to the report.

Morgan Joseph cautioned that companies require new capital in addition to financing debt. An absence of new money likely would crimp broader economic development, the report said.

© 2017 Thomson/Reuters. All rights reserved.

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U.S. financial markets are on their way to knocking down a wall of debt maturity that has endangered the U.S. economic recovery and threatened to push more companies into bankruptcy, according to an investment firm report on Tuesday. Companies must refinance at least $375...
Wall,Debt,Maturity,corporate
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2010-24-24
 

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