Global corporate debt rated by S&P Global Ratings grew by over $684 billion in the first half of 2021, reaching $22.8 trillion by July 1. This figure consists of corporate debt instruments (including bonds, notes, loans, revolving credit facilities, and preferred securities) from financial and nonfinancial corporate issuers. The pace of debt growth slowed to 3.1% in the first half of 2021 from 3.8% over the same period in 2020, when issuers raised unprecedented funding to bolster liquidity and bridge operations in response to COVID-19.

Chart 1

Speculative-grade (rated 'BB+' or lower) debt led the growth, up 7.9% to $5.58 trillion--exceeding its pace from the first half of 2020--as leveraged finance issuance (including both leveraged loans and speculative-grade bonds) surged to a midyear high near $1 trillion, far outpacing the issuance volumes of recent years (see chart 2). This amount of issuance was notably higher than the level of debt growth in the first half of the year because some of the issuance was used to refinance existing debt. Meanwhile, investment-grade (rated 'BBB-' or higher) debt growth fell to 1.6% as issuance slowed from 2020's record pace.

Chart 2

By rating category, the largest increases were in the 'BBB' and 'B' categories, whose debt increased by $384.5 billion and $265 billion, respectively. Note that debt amounts in this study are aggregated based on the issue credit rating (rather than by the issuer credit rating).

The 'BBB' rating category saw growth from new issuance as well as from rising stars (issuers upgraded to investment-grade from speculative-grade). There were 17 rising stars globally in the first half of 2021, and their debt has exceeded that of fallen angels (issuers downgraded to speculative-grade from investment-grade) so far this year. Some of the largest rising stars in the first half included Fiat Chrysler Automobiles N.V., Lennar Corp., and CDW Corp. (see "'BBB' Pulse: M&A Rebound Could Put The Corporate Credit Recovery On The Back Burner," Oct. 11, 2021).

The 'B' category, meanwhile, showed the most growth within speculative-grade in the first half of 2021, growing by 13% to $2.34 trillion. This growth stemmed from the surge of leveraged finance issuance as well as the high number of issuers upgraded back into the 'B' category, with more than 80 issuers upgraded to the 'B' category from the 'CCC' rating category in the first half of 2021 (see "Why 'CCC' Rated Companies Have Risen And Default Rates Have Not," Oct. 19, 2021).

About 76% Of Global Corporate Debt Is Rated Investment-Grade

By dollar amount, investment-grade-rated debt accounts for 76% of global corporate (financial and nonfinancial) debt, even though just 49% of rated issuers are investment-grade (see chart 3). In contrast, even though 51% of global corporate issuers are rated speculative-grade, these issuers account for just 24% of corporate debt globally. Speculative-grade issuers tend to be smaller, with lower revenue and lower debt outstanding, even as they have higher leverage than investment-grade issuers.

Chart 3

The portion of investment-grade debt has held within 76%-78% of total rated debt over the past five years. However, within investment-grade, the 'BBB' category accounts for a growing share of the debt. The 'BBB' rating category is the largest, with $9 trillion in rated debt, and now accounts for 52% of investment-grade debt (up from 43% in 2016). This category has grown as both investors and issuers have found it to be a sweet spot amid low interest rates and accommodative financing conditions.

Out of total speculative-grade debt (87% of which is from nonfinancial companies), the 'BB' category is the largest, with $2.7 trillion. Meanwhile, about $515 billion in debt is rated in the lowest rating category, at 'CCC+' and below. This debt now accounts for 9% of speculative-grade debt, down by 2 percentage points over the past year as more companies have been upgraded back to the 'B' category.

Table 1

By region, U.S.-based issuers (including from the tax havens Bermuda and the Cayman Islands) account for the largest share of rated debt globally, with $11.2 trillion. Compared with other developed regions, the U.S. has the highest share of debt from nonfinancial companies, at 76%. The U.S. region also has the highest share of speculative-grade debt, with $3.35 trillion, or nearly 30% of U.S. corporate debt. In part, this reflects the highly developed capital markets in the U.S. and its high degree of banking disintermediation.

Emerging market corporate debt totals $1.35 trillion, which accounts for only 6% of rated debt globally. A considerable share of the region's overall outstanding debt is unrated, and this study excludes debt instruments that do not have global scale ratings. We expect this share of rated emerging market debt to continue to grow as capital markets in the region develop.

Table 2

By country, the U.S., the U.K., France, and Germany each has over $1 trillion in rated corporate debt. Together, these countries account for 67% of the total global rated corporate debt. Among these, U.S.-based companies account for the largest share of debt, with close to $10.8 trillion (excluding debt from tax havens). The U.K. follows with $1.65 trillion, France with $1.50 trillion, and Germany with $1.29 trillion (see table 3).

Table 3

Among nonfinancial companies, the largest and most capital-intensive sectors often have the highest debt outstanding in the market. The utilities, telecommunications, and consumer products sectors lead with $2.04 trillion, $1.59 trillion, and $1.42 trillion, respectively.

Table 4

The sectors with the most investment-grade nonfinancial debt are utilities ($1.75 trillion), telecommunications ($1.08 trillion), and consumer products ($927 billion). On the other hand, the media and entertainment sector has the most speculative-grade debt ($735 billion), followed by health care ($515 billion) and telecommunications ($510 billion).

About 91% of the total debt of financial services issuers is rated investment-grade, and most of this debt is from financial institutions, such as banks and brokerages.

The U.S. Leads Global Corporate Debt Growth

As of July 2021, U.S. rated corporate debt had increased 4.2% since the year began, to $11.2 trillion. Low borrowing costs and investor appetite for credit have contributed to the rising debt.

• Investment-grade corporate debt increased by 3.1% to $7.80 trillion.
• Speculative-grade corporate debt increased by 6.7% to $3.35 trillion.
• The share of U.S. rated corporate debt that is speculative-grade rose to 30% as of July 2021 from 29% at the beginning of the year, and this share has remained within 28%-30% over the past five years (see chart 4).
• The media and entertainment sector continues to account for the most speculative-grade debt, with $553 billion.
• The health care sector reported the largest increase in speculative-grade debt in absolute terms since the year began, up by 13% to $303 billion.

Chart 4

• The 'BBB' category accounts for the most rated U.S. corporate debt, with $4.60 trillion, or 41% (see chart 5).
• Within speculative-grade, the 'B' category is now the largest with $1.52 trillion, up 14% since the year began and slightly higher than the 'BB' category's $1.48 trillion.
• Nonfinancial companies account for the largest share of U.S. corporate debt, including 70% of investment-grade debt (with $5.45 trillion) and 90% of speculative-grade debt (with $3.03 trillion).

Chart 5

Table 5

The U.S. nonfinancial sectors with the most debt are as follows (see table 6):

• Rated corporate debt: utilities ($1.09 trillion), high technology ($947 billion), and telecommunications ($888 billion)
• Investment-grade corporate debt: utilities ($884 billion), telecommunications ($674 billion), and high technology ($654 billion)
• Speculative-grade corporate debt: media and entertainment ($553 billion), consumer products ($320 billion), and health care ($303 billion)

Table 6

By debt type, bonds and notes account for the majority of U.S. corporate debt, but this share has fallen since the year began:

• Most rated financial sector corporate debt in the U.S. (95%) is in the form of bonds, notes, or preferred securities (see table 7).
• Nonfinancial debt consists of a much higher share of loans and revolving credit facilities (near 23%), most of which are rated speculative-grade.
• Loans and revolving credit facilities now account for just over 50% of nonfinancial speculative-grade debt (up from 49% at the start of the year) as the share has increased alongside investors' relative demand for floating-rate debt.

Table 7

European Rated Corporate Debt Rises More Slowly

European corporate debt as of July 2021 was up 1.5% since the start of the year, reaching $8.24 trillion (see chart 6). However, this marked a much slower pace than in the same period in 2020, when European corporate debt rose by 3.5% (see Appendix I for tables in euros). As in the U.S., speculative-grade debt led the increase in Europe.

• Investment-grade corporate debt fell by 0.5% since the year began to $6.69 trillion.
• Speculative-grade debt increased by 11.6% to $1.55 trillion (see chart 5).
• The share of European rated corporate debt that is speculative-grade rose to 19%, from 17% at the beginning of the year.
• Telecommunications account for the most nonfinancial corporate speculative-grade debt in Europe, and this sector also saw the largest increase in speculative-grade debt in absolute terms since the year began, with an increase of $23 billion.

Chart 6

• The 'BBB' category accounts for the most European corporate debt with $3.17 trillion, or 38% (see chart 7).
• Within speculative-grade, the 'BB' category is the largest with $782.6 billion.
• Nonfinancial companies account for just 46% of investment-grade debt with $3.06 trillion, and they account for 80% of speculative-grade debt with $1.24 trillion.
• European financial services companies have $807 billion in debt rated 'AAA', and this includes secured debt, such as covered bonds, that may be rated higher than the corresponding issuer.

Chart 7

Table 8

By nonfinancial corporate sector, the European sectors with the most debt are as follows (see table 9):

• Rated corporate debt: utilities ($607 billion), consumer products ($565.5 billion), and telecommunications ($559.9 billion)
• Investment-grade corporate debt: utilities ($554.8 billion), consumer products ($434.9 billion), and oil and gas ($319.5 billion)
• Speculative-grade corporate debt: telecommunications ($270.2 billion), media and entertainment ($138 billion), and health care ($131 billion)

Table 9

By debt type, bonds and notes account for the majority of European rated corporate debt, while loans and revolving credit facilities are highly concentrated among nonfinancial companies:

• About 19% of rated nonfinancial sector corporate debt in Europe is in the form of loans and revolvers (see table 10).
• Bonds and notes remain the predominant funding source for speculative-grade nonfinancial companies in Europe, representing 53% of debt, up slightly from the beginning of the year.

Table 10

Appendix I: Euro-Denominated Tables

Table 11

Table 12

Table 13

Appendix II: Rating Distribution By Issuer Count

Chart 8

Chart 9

Chart 10

Data Methodology

For this report, we analyzed the amount of financial and nonfinancial corporate debt rated by S&P Global Ratings.

We included the rated debt of all parent companies and their foreign subsidiaries in each region. We counted the debt of all of these companies regardless of the currency or market in which the debt was issued. We converted any non-U.S.-dollar-denominated debt to U.S. dollars based on exchange rates on July 1, 2021.

The issue types covered are loans, revolving credit facilities, bank notes, bonds, debentures, convertible bonds, covered bonds, intermediate notes, medium-term notes, index-linked notes, equipment pass-through certificates, and preferred stock. In the case of revolving credit facilities, the amount usually represents the original facility limit, not necessarily the amount that has been drawn. Debt amounts are tallied as the face value of outstanding rated debt instruments. We exclude individual issues that are not currently rated at the instrument level, as well as instruments from issuers that are currently rated 'D' (default) or 'SD' (selective default).

We aggregated the data by issue credit rating. We also aggregated sector-specific data according to the subsector of the issuer. The financial services sector is defined as all banks, brokers, insurance companies, asset managers, mortgage companies, and other financial institutions. We aggregated debt issued by financial arms of nonfinancial companies with the sector of the corporate parent.

For this study, we aggregated the amount of rated corporate debt among four regions:

• U.S. and tax havens: U.S., Bermuda, and the Cayman Islands
• Other developed: Australia, Canada, Japan, and New Zealand
• Europe: Austria, Belgium, British Virgin Islands, Bulgaria, Channel Islands, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Gibraltar, Greece, Guernsey, Hungary, Iceland, Ireland, Isle of Man, Italy, Jersey, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Moldova, Monaco, Montenegro, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland, and the U.K.
• Emerging markets: Argentina, Armenia, Aruba, Azerbaijan, Bahamas, Bahrain, Bangladesh, Barbados, Belarus, Belize, Bolivia, Bosnia-Herzegovina, Brazil, Brunei Darussalam, Cambodia, Chile, China, Colombia, Costa Rica, Curacao, Dominican Republic, Egypt, El Salvador, Fiji, Gabon, Georgia, Ghana, Grenada, Guatemala, Honduras, Hong Kong, India, Indonesia, Israel, Jamaica, Jordan, Kazakhstan, Korea (Republic of), Kuwait, Lebanon, Liberia, Macao, Malaysia, Marshall Islands, Mauritius, Mexico, Mongolia, Morocco, Namibia, Netherlands Antilles, Nigeria, Oman, Pakistan, Panama, Papua New Guinea, Paraguay, Peru, Philippines, Qatar, Russia, Saudi Arabia, Singapore, South Africa, Sri Lanka, Syrian Arab Republic, Taiwan, Thailand, Togo, Trinidad and Tobago, Tunisia, Turkey, Turks and Caicos Islands, Ukraine, United Arab Emirates, Uruguay, Uzbekistan, Venezuela, and Vietnam

Related Research

• Global Refinancing--Rated Corporate Debt Due Through 2026 Holds Near $12 Trillion, July 27, 2021
• Opportunistic Refinancing Is Pushing Near-Term U.S. And European Corporate Debt Maturities Lower, Report Says, Aug. 11, 2021
• Global Financing Conditions: Bond Issuance Is Expected To Finish The Year Close To 2020 Levels; Drop 2% Next Year, Oct. 25, 2021