“Global debt levels have become “higher and riskier” than that of a decade ago, meaning that “another credit downturn may be inevitable”, S&P Global Ratings has warned.
“In a report entitled Next Debt Crisis: Will Liquidity Hold?, published on Tuesday (12 March), S&P found global debt has surged by around 50% since the 2008 Global Financial Crisis, led by major-economy governments and Chinese non-financial corporates, while global debt-to-GDP ratios have risen to more than 231%, compared with 208% in June 2008.
“In the corporate space, the report found 61% of companies have aggressive or highly leveraged financial risk profiles. This is particularly the case among Chinese firms which make up around two-fifths of debt S&P categorises as “aggressive and highly leveraged”.
“S&P also noted there is now a much higher concentration of ‘BBB’ bond issuers within the investment-grade arena, with ratings trending down globally over the past decade…
“S&P Global Ratings credit analyst Terry Chan said: “Global debt is certainly higher and riskier today than it was a decade ago, with households, corporates, and governments all ramping up indebtedness.”
“Europe’s four biggest economies — Germany, France, Italy, and the UK — are close to negative growth as German industrial output dropped unexpectedly in January, which led France to outperform its larger neighbour but not replace Germany’s economic might as an engine for growth in the Eurozone.”
“Euro-area industrial production fell more than twice as much as forecast in December, raising further questions over the state of the bloc’s economy.
“The 0.9 percent drop — more than twice the 0.4 percent forecast — was driven by declines in capital and non-durable consumer goods production. From a year earlier, output plunged the most since 2009, when the economy was dealing with the fallout from the financial crisis.”
“Theresa May is facing another potentially humiliating Brexit showdown in the Commons, just 24 hours after her latest crushing defeat. MPs will vote on ruling out a no-deal Brexit, after the prime minister was forced to concede a free vote for Conservative MPs to avoid ministerial resignations. If MPs vote against no-deal, 24 hours later they will vote on extending Article 50, which if carried would mean the UK would not leave the EU on the proposed date of March 29.
“Concluding her post-vote statement to MPs, the prime minister said: “Voting against leaving without a deal and for an extension does not solve the problems we face.
“”The EU will want to know what use we mean to make of such an extension.”
“Tariffs will be cut to zero on 87% of imports to the UK as part of a temporary no-deal plan to prevent a £9bn price shock to business and consumers, the government has announced.”
“…the fact that [India’s] industrial output growth has slipped for three months in a row now shows that manufacturing hasn’t really strengthened.
“Furthermore, economic growth in the fourth quarter is expected to fall and the industrial output growth underscores such expectations.”
“Japan’s core private-sector machinery orders fell for a third straight month in January, the government said Wednesday, signaling companies are becoming less willing to spend in the face of China’s economic slowdown.”
“Amid worries over China’s economy, some currencies — particularly those of commodity-producing countries — will be most vulnerable to its slowdown. Experts say that two currencies stand out as being the most exposed to China: the Australian dollar and the New Zealand dollar.
“China is the biggest trading partner of both countries, with 24.9 percent of New Zealand’s exports and about a third of Australian exports going to the Asian giant.”
“A growing number of Australians are worried about losing their jobs following soft economic growth numbers, as a slide in consumer sentiment matches the loss in business confidence and conditions… The Unemployment Expectations Index recorded an 8.9 per cent jump, indicating more consumers expect unemployment to rise in the year ahead.”
“Each hour that passes without power in Venezuela brings more havoc and stress to a country already on edge. The blackout has lasted several days and with poverty levels already high and 40C heat, how is the country coping?”