Global corporate maturities ramp up steadily in coming years, putting pressure on companies to seek opportunities for refinancing. Challenges lie ahead for borrowers as they face higher-for-longer interest rates, uncertain financing conditions, and an overhang of pandemic-era debt. Furthermore, this year's decline in leveraged loan and 'CCC' category bond issuance likely adds to the refinancing impetus for borrowers with debt rated 'B-' or lower.

However, issuers have made progress in lowering 2023 and 2024 maturities through issuance and refinancing, and this reduction appears to be alleviating some pressure on near-term maturities.

S&P Global Ratings rates $23.2 trillion in corporate debt (including bonds, loans, and revolving credit facilities from financial and nonfinancial corporate issuers). About 8.2% of this total is scheduled to mature over the next 12 months (through June 30, 2024), and this share has remained largely steady over the past year as companies have continued to refinance debt or push out maturities amid challenging conditions.

Of the rated debt maturing globally over the next 12 months, 12.2% (or $231 billion) is rated speculative-grade ('BB+' or below), and we view this debt as more vulnerable to facing refinancing risk than investment-grade (rated 'BBB-' or higher) debt. The portion of speculative-grade debt that likely faces the greatest refinancing risk is the $38 billion rated 'CCC+' or lower, given issuance of such low-rated debt has contracted further this year.

About 29.7% of total debt (or $6.88 trillion) is scheduled to mature over the next 36 months (through June 30, 2026), and because companies have tended to refinance 12-18 months ahead of maturities, we believe these looming maturities could exacerbate financing demands.

Of the debt maturing in the next 36 months, 20.8% (or $1.43 trillion) is speculative-grade, led by maturities from the media and entertainment, health care, and consumer products sectors. Maturities over this period include $410 billion in debt rated 'B-' and lower, more than two-thirds of which is in leveraged loans and revolvers--and many issuers of such floating-rate debt have been looking for opportunities to refinance with fixed-rate debt (such as bonds).

Chart 1

This analysis is based on a review of debt instruments rated by S&P Global Ratings and issued by financial and nonfinancial corporate borrowers globally. Debt amounts have been aggregated by issue credit rating, and regional breakouts are aggregated by the parent's country of incorporation.

Financing Conditions Are Diverging Between Higher- And Lower-Rated Issuers

The rebound in bond issuance has helped alleviate some near-term refinancing concern.  Investment-grade bond issuance is up 7% year over year, to $1.29 trillion (through June 30, 2023). Bond issuance for the 'BB' and 'B' categories is up 80% and 43%, respectively, this year. Investor demand for this new issuance has been strong, with credit spreads narrowing across rating categories in the U.S.

However, even as 'BB' and 'B' issuance is rebounding from last year's lows, 'CCC' category bond issuance (through June) is down 83% from last year's volume and is at its lowest level since the Great Financial Crisis. As an additional challenge for highly leveraged companies, leveraged loan issuance has also fallen from last year's volume--down 51% year to date in the U.S. and 30% in Europe.

Given issuers' uncertainty about the extent of further interest rate hikes, some are turning to the bond market to refinance existing leveraged loans in bond-for-loan takeouts, contributing to the slowdown in loan volume. While the volume of leveraged finance issuance (including speculative-grade bonds and leveraged loans) over the past 12 months remains greater than upcoming maturities through 2024, we expect issuance volumes will need to rise to meet escalating maturity demands in 2025 and after.

By contrast, investment-grade bond issuance over the past 12 months remains well above upcoming annual maturity volumes.

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Investment-grade issuance lifts total debt

The par value of rated debt outstanding grew at its fastest pace in two years in the first half of 2023--up 2.2% to $23.2 trillion (as of July 1, 2023).  This increase was entirely from investment-grade debt and offset a 1% contraction in speculative-grade debt as leveraged loan issuance contracted and defaults increased.

Additionally, at the high end of the speculative-grade category, rising stars (issuers upgraded to investment-grade from speculative-grade) have outpaced fallen angels (issuers downgraded to speculative-grade from investment-grade) year to date, contributing to the decrease in speculative-grade debt. These rising stars, including Pilot Travel Centers LLC, Ingersoll Rand Inc., and MSCI Inc., also added to the growth of investment-grade debt.

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Near-Term Nonfinancial Debt Paydowns Continue

Nonfinancial corporate issuers are making progress in pushing out near-term maturities.  Maturities in the second half of 2023 and 2024 have fallen by 8% and 7%, respectively, followed by a 1% decline in 2025 maturities. However, as companies take steps to lower near-term maturities through refinancings and amend-to-extend activity, this extension is adding to the already high maturities in 2026 and after. Nearly 6% of 2026 maturities (and 13% of those in 2028) are from debt issued this year.

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Speculative-grade nonfinancial companies have led the reduction in near-term maturities.  Maturities in the second half of 2023, full-year 2024, and full-year 2025 have fallen by 31%, 23%, and 8%, respectively, and the pace of these reductions was faster in the first half of 2023 than in the first half of 2022. While this eases near-term maturity demands, newly issued debt is adding to the debt coming due in 2028--when speculative-grade nonfinancial maturities peak.

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Despite this refinancing activity in the first half of 2023, pressure remains.  The median maturity for a speculative-grade nonfinancial debt instrument has shortened to 3.9 years (as of July 1, 2023) from 4.3 years (as of July 1, 2022). Nearly 4.5% of total speculative-grade nonfinancial debt is scheduled to mature in the next 12 months, up modestly from 4.2% one year ago. This reflects an aging of existing debt and a shortening of tenors among newly issued speculative-grade bonds in the first half of 2023.

By contrast, the median maturity for an investment-grade nonfinancial instrument showed a more modest decline, to 6.2 years from 6.4 years.

About 7.0% of total nonfinancial corporate debt is scheduled to mature over the next 12 months, up slightly from the same period last year. Of this total:

• 80.2% is investment-grade;
• The utility sector accounts for the largest amount, and over 90% is investment-grade; and
• The media and entertainment sector accounts for the largest share of speculative-grade maturities, with weaker-rated issuers already facing stress as this sector leads in defaults year to date.

For nonfinancial corporate debt maturing over the longer term globally:

• Looming maturities in 2024 and after are beginning to add to near-term refinancing needs, given companies tend to refinance their debt 12-18 months in advance;
• Speculative-grade maturities escalate rapidly, nearly doubling to $580 billion in 2025 from $296.8 billion in 2024;
• Investment-grade maturities peak at $940.9 billion in 2026, while speculative-grade maturities peak later (in 2028) and higher (at $944.3 billion); and
• Speculative-grade maturities grow as a share of annual maturities, reaching 56% in 2028.

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The lowest-rated debt likely faces the most pronounced refinancing challenges.  Debt rated 'B-' and lower, most of which is maturing leveraged loans, rapidly escalates through 2026. New 'B' category bond issuance took up some of the slack from weaker leveraged loan issuance with bond-for-loan takeouts in the first half of the year. However, falling issuance of leveraged loans and 'CCC' category bonds is adding to refinancing challenges for the lowest-rated issuers.

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Nearly $200 billion in nonfinancial debt rated 'B-' or lower is scheduled to mature over the next 24 months:

• This debt is nearly evenly split between issues rated 'B-' ($98.9 billion) and those rated 'CCC+' or lower ($98.5 billion).
• Most is floating rate--$134.7 billion of this debt consists of loans and revolvers, and these borrowers are already experiencing higher-for-longer interest rates.
• By sector, health care accounts for the largest share of the debt (with $36.8 billion), followed by media and entertainment (with $28 billion).
• Increased interest coverage expense, coupled with higher labor costs, is adding to difficulties for many companies in these sectors.

Higher for longer

While benchmark rates have already risen sharply in the first half of 2023, S&P Global Ratings economists project rates will be higher for longer. Their baseline economic forecasts have the fed funds rate at 5.4% at year-end 2023, with the European Central Bank's deposit rate at 3.75%.

Floating-rate instruments, such as loans and revolvers, make up a higher share of speculative-grade than investment-grade debt. Borrowers with floating-rate debt are likely to feel the squeeze of higher rates sooner than issuers with more fixed-rate debt. Nearly 45% of speculative-grade debt consists of loans and revolvers, compared with just 3% of investment-grade.

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Financial Services Maturities Show A Less Pronounced Rise

While financial services maturities peak sooner than nonfinancial maturities, they show a less pronounced increase over the coming years, rising to a peak of $1.03 trillion in 2025 from $907.9 billion in 2024.

Financial services also showed a modest reduction in 2024 maturities, at 2%, through the first half of this year, whereas maturities have extended into later years. The net reduction would have been greater, except that medium-term notes issued in 2023 are also adding to 2024 maturities.

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Financial services issuance continues to show resilience.  Rated issuance in the first half of 2023 remained strong, down by less than 1% despite the sudden collapse of Silicon Valley Bank and the takeover of Credit Suisse, which sent tremors through the banking sector. Heightened stress led to a brief slowdown in financial services issuance in March and April, but volumes had rebounded by May.

Recent issuance volumes remain considerably higher than upcoming maturities. Since 2014, issuance volumes have exceeded $1.2 trillion annually--more than upcoming annual maturities, which remain at $1.03 trillion or lower.

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Upcoming maturities for financial services appear well positioned, with 10.3% of financial services debt scheduled to mature over the next 12 months. This share is little changed from the same period last year.

For financial services debt maturing over the next 12 months globally:

• Half is from European issuers and 26% from U.S. issuers; and
• 96.9% is investment-grade.

For financial services debt maturing through 2025 globally:

• The 'A' category is the largest (at 47.3%), followed by the 'BBB' category (at 25.8%);
• 99% consists of bonds and notes; and
• $94.5 billion is speculative-grade, and this total largely consists of debt from nonbank financial institutions from the U.S., subordinated debt of European banks, and debt from emerging market banks.

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Appendix: Regional Breakouts

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Data Approach

For this analysis, we estimated maturities and potential refunding needs of financial and nonfinancial corporate debt rated by S&P Global Ratings.

For each region, we included the rated debt instruments of all parent companies and their foreign subsidiaries. We counted the debt of all 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 the exchange rates on July 1, 2023.

The issue types covered include 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 excluded individual issues that are not currently rated at the instrument level, as well as instruments from issuers currently rated 'D' (default) or 'SD' (selective default). We expect the credit market will have already accommodated some of the debt remaining in this year, given normal data-reporting lags.

We aggregated the data by issue credit rating. We also aggregated sector-specific data according to the subsector of the issuer. The financial 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. We excluded government-sponsored agencies such as Fannie Mae and Freddie Mac, project finance, and public finance issuers.

Related Research

• Credit Trends: This Month In Credit: Facing The Pressure Of Higher Rates (June 2023), June 30, 2023
• Economic Outlook Eurozone Q3 2023: Short-Term Pain, Medium-Term Gain, June 26, 2023
• Economic Outlook U.S. Q3 2023: A Sticky Slowdown Means Higher For Longer, June 26, 2023
• Refinancing Needs And Rate Uncertainty Drive Issuers To The High-Yield Bond Market, June 1, 2023