S&P warns of growing Asia-Pacific borrowing


The Asia-Pacific region is seen to push its debt up to $32 trillion by 2017, Standard and Poor’s (S&P) said in a report released on Thursday.

“Asia-Pacific continues to lead the way among global regions in terms of financing requirements for nonfinancial corporate borrowers,” according to the report “The Credit Cloud: China Will Leapfrog The US In The Race For $53 Trillion In Corporate Funding.”

The report added that the region will seek $27 trillion for refinancing that would eventually push its debt to $32 trillion, or 60 percent higher than at the end of last year.

Asia-Pacific could have more corporate debt than North America, the eurozone and the United Kingdom combined by 2017, the S&P report noted.

“Asia-Pacific’s nonfinancial corporates, on the backs of Chinese companies, are lining up for $25 trillion to $27 trillion in refinancing and new financing in the next five years,” it stated.

Meanwhile, the report continued that China is poised to overtake the US as the country with the world’s largest corporate debt wall in 2014.

“Within the next five years, China’s economic expansion could see its nonfinancial corporates looking for $16 trillion to $18 trillion in financing,” it explained.

The S&P report mentioned that the country’s credit boom has resulted in outstanding corporate debt of 134 percent of gross domestic product.

Globally, the report said that nonfinancial corporations will demand up to $53 trillion in refinancing and new debt needs over the next five years.

It added that as the US economy recovers, corporates will seek $13 trillion for refinancing to make up for recent underinvestment in capital expenditures.

Meanwhile, eurozone and UK corporations will seek $10 trillion, constrained by a low-growth environment marked by tough loan renewal conditions.

In addition, Latin America’s corporations will seek $1.4 trillion, primarily to support growing consumption and proposed energy and infrastructure projects.


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