By Patturaja Murugaboopathy
Sept 25 (Reuters) – A growing wall of US corporate debt is set to mature from 2027, putting pressure on companies to refinance borrowings raised at ultra-low interest rates during the pandemic.
About $4.3 trillion of non-financial corporate bonds issued in US markets will mature between 2027 and 2031, a Reuters analysis of LSEG data showed. Annual maturities rise from about $572 billion in 2027 to roughly $1.03 trillion in 2030, after many companies pushed debt into later years through refinancing.
The challenge comes as global debt has climbed above a record $365 trillion, according to the Institute of International Finance, while higher Treasury yields have lifted refinancing costs across markets. The benchmark 10-year US Treasury yield is above 5%, around its highest level since 2007.
As the debt comes due, companies that locked in cheap fixed-rate funding earlier in the decade will increasingly have to refinance at higher costs, pressuring earnings and cash flow.
The burden will be heaviest for lower-rated borrowers. High-yield bond maturities jump from about $68.5 billion in 2027 to $314.1 billion in 2029, according to LSEG, while investment-grade maturities increase to $512.6 billion from $437 billion.
High-yield debt will account for about a third of all maturities in 2029, up from 12% in 2027.
Bond fund manager PIMCO said most investment-grade and high-yield issuers should be able to absorb higher refinancing costs, but the weakest borrowers face a sharper squeeze. Coupons on CCC-rated bonds due in 2027 and 2028 could roughly double if refinanced at current index yields, it said.
The refinancing wave will coincide with heavy borrowing by major technology companies to fund artificial intelligence infrastructure. Goldman Sachs expects gross debt issuance by hyperscalers including Amazon, Alphabet, Meta, Microsoft and Oracle to reach $420 billion in 2027, up 60% from estimated 2026 levels.
(Reporting by Patturaja Murugaboopathy. Editing by Vidya Ranganathan and Mark Potter)
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