Here’s a relatively disconcerting statistic regarding the European companies tracked by rating agency Standard & Poor’s: €329.9bn of corporate debt is set to fall due in 2009, and another €235.3bn in 2010.
As for who’s most at risk of having problems related to this chunky refinancing requirement, S&P says the largest percentage of debt comes due among ‘A’ and ‘BBB’ rated companies . Still, this shouldn’t be a surprise as those firms generally have greater accessibility to credit lines and loans versus lower-rated companies.
The chart reflects the situation as follows:
As for the sector breakdown, S&P says:
When amounts that need to be refinanced are split by sector, we observe that the utilities present the largest absolute amount of debt maturing in 2009, with an aggregate figure of €62.3 billion (see chart 2). Telecoms, oil and gas, and autos and trucks also have large absolute refinancing needs, with totals ranging from €28.8 billion to €40.0 billion. Again, a similar pattern emerges by sector for debt maturing in 2010, albeit on a smaller scale.
And out of those, S&P seems to think the auto industry will be most under pressure:
Auto companies in our view have two distinct refinancing needs: One relates to their industrial operations; and the other is linked to their captive finance companies, which provide financing to their customers. Industrial funding needs reflect normal debt maturities typical of nonfinancial corporations, which increased in the fourth quarter of 2008 as a result of a sudden drop in demand and buildup of inventory. We believe that automakers may already have burned through a substantial amount of cash and part of their existing backup lines and are likely to need to secure new financing for their industrial activities for an amount ranging between €1 billion and €3 billion per company for 2009.