As a follow up to my article “So who’s buying the S&P500”, the chart below should give cause for considerable concern. It shows the huge spike in maturing debt that will need to be refinanced over the next few years.

Total corporate debt is around USD4 trillion and most of that will need to be rolled over. Depending upon the Federal Reserve’s actions on Quantitative Easing (“QE”) and Zero Interest Rate Policy (“ZIRP”), this could be at considerably higher interest rates than current rates.

I also suspect that a significant part of those bonds classified as Investment Grade may turn out to look a little more like High Yield (AKA Junk).

 

sp_corp_debt

Source Standard & Poor’s (@standardpoor)

29 July 2014 Markets