The Gulf Time Newspaper One of the finest business newspapers in the UAE brought to you by our professional writers and editors.
There’s been endless speculation in recent weeks about whether the US, and the whole world for that matter, are about to sink into
recession.
Underpinning much of the angst is an unprecedented $29 trillion corporate bond binge that has left many companies more indebted than ever.Whether this debt overhang proves to be a catalyst for recession or not, one thing is clear in talking to credit-market observers: It’s a problem that won’t go away any time soon.
Strains are emerging in just about every corner of the global credit market. Credit-rating downgrades account for the biggest chunk of ratings actions since 2009; corporate leverage is at a 12-year high; and perhaps most worrisome, growing numbers of companies — one third globally —are failing to generate high enough returns on investments to cover their cost of funding. Pooled together into a single snapshot, the data points show how the seven-year-old global growth model based on cheap credit from
central banks is running out of steam.“