Companies have made progress reducing the amount of debt due in 2024, but escalating maturities in coming years include a growing concentration of speculative-grade (rated 'BB+' or below) debt. And as borrowers seek to refinance this looming debt, it will increase pressure on financing conditions, as demand for funding will rise. Furthermore, even though interest rate cuts are expected to begin later this year, borrowers face higher costs of funding for fixed-rate debt that was originally issued when rates were lower. In the meantime, borrowers with floating-rate debt (which accounts for just over half of speculative-grade debt) are already adjusting to the higher funding cost environment.

S&P Global Ratings rates $23.5 trillion in corporate debt (including bonds, loans, and revolving credit facilities from financial and nonfinancial corporate issuers). Nearly $2 trillion (or 8.5% of this total) is scheduled to mature over the next 12 months (through Dec. 31, 2024), and this maturing share is up marginally from 8.0% over the past year.

Short-term, 12.3% (or $245.3 billion) of the rated debt maturing globally over the next 12 months is speculative-grade. We view this debt as more vulnerable to refinancing risk than investment-grade (rated 'BBB-' or higher) debt. Lower-rated debt tends to present more refinancing risk than higher-rated debt, but just $60.4 billion of the debt maturing in 2024 is rated 'B-' or lower.

Medium term, about 31% of total debt (or $7.3 trillion) is scheduled to mature over the next 36 months (through Dec. 31, 2026), and because companies have tended to refinance 12-18 months in advance of maturity, we believe these upcoming maturities will pressure financing demands. Of the debt maturing in the next 36 months, 20.4% (or $1.49 trillion) is speculative-grade, led by maturities from the media and entertainment, health care, and telecommunications sectors.

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 Remain Challenging For The Lowest-Rated Issuers

Speculative-grade bond issuance rebounded for issues rated 'B-' and above in 2023 from the low levels of 2022 as companies actively refinanced debt.   Speculative-grade bond issuance rated 'B-' and above rose 82%, in 2023, rebounding from 2022's lows. A majority of this issuance was to refinance existing debt.

However, financing conditions were considerably more challenging for debt rated below 'B-'. In 2023, 'CCC' category bond issuance fell to its lowest level (at $2.96 billion) since 2008, down 79% from 2022's volume. As an additional challenge for highly leveraged companies, leveraged loan issuance also fell from the prior year's volume--down 26% in 2023, though it has picked up markedly in early 2024.

Even though financing conditions continue to pose challenges for some of the lowest-rated borrowers, combined issuance volume of leveraged loans and speculative-grade bonds remained higher in 2023 than the upcoming annual speculative-grade maturities in either 2024 or 2025. Even when annual maturities ramp up in 2026 and 2027, the speculative-grade maturities for those years exceed 2023's issuance volume by just 10%. Recent issuance and amend-to-extend activity has helped to bring down near-term maturities. And for the lower-rated borrowers, the growing supply of private credit is providing another source of funding for leveraged borrowers.

While upcoming speculative-grade maturities through 2027 appear roughly in line with recent issuance, further out, combined issuance volume of leveraged loans and speculative-grade bonds would need to rise sharply to meet the $1.1 trillion wall of speculative-grade maturities (including debt of financial and nonfinancial corporates) coming due in 2028. Speculative-grade bond and leveraged loan issuance combined have only exceeded $1.1 trillion annual volumes in three of the past 10 years. While borrowers have some years to reduce or pay down this debt before it reaches maturity, this debt is now coming into focus as it draws nearer.

Meanwhile, investment-grade bond issuance climbed 6% year over year in 2023, to $2.1 trillion. For perspective, investment-grade bond maturities reach of peak of $1.95 trillion in 2025 and then decline. Annual investment-grade bond issuance has exceeded that amount in nine of the past 10 years. Current investment-grade bond issuance volumes appear sufficient to meet upcoming maturities.

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Investment-grade growth lifts debt totals

The par value of rated debt outstanding grew by 3.5% in full year 2023--to $23.5 trillion (as of Jan. 1, 2024).   This increase was entirely from investment-grade debt, which rose by 5.6% and more than offset a 3.2% contraction in speculative-grade debt.

Several factors contributed to the contraction in speculative-grade debt over the past year. On one hand, the number of global corporate defaults jumped by 80% in 2023 to 153. Nearly half of the defaults in 2023 were distressed exchanges, and while many of these issuers were still rated at the end of 2023, these exchanges reduced outstanding debt obligations.

On the other hand, 2023 also saw an uptick in rising stars (issuers upgraded to investment-grade from speculative-grade) that shifted some of the debt from speculative-grade to investment-grade. Rising stars rose to 39 in 2023 and more than doubled the number of fallen angels (issuers downgraded to speculative-grade from investment-grade). The largest corporate rising star of the year was Ford Motor Co. (and this upgrade affected over $100 billion in debt), and other large rising stars also included Las Vegas Sands Corp., Pilot Travel Centers LLC, ICON PLC, Howmet Aerospace Inc., and Deutsche Lufthansa AG. Together, financial and nonfinancial rising stars accounted for near $225 billion in debt affected in 2023, more than triple the amount of debt affected by fallen angels.

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Speculative-Grade Refinancing Kept Pace Last Year

Nonfinancial corporate issuers continued to make overall progress reducing the amount of debt maturing in the next two years.   Maturities in 2024 were reduced by 13% in 2023, while 2025 maturities were reduced by 6%. New issuance continues to add to the debt coming due in 2026 and after. The most pronounced increase is seen in the 2028 maturities, when nonfinancial maturities (including investment- and speculative-grade) peak at $1.89 trillion, an amount that rose by 31% during 2023.

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Speculative-grade nonfinancial companies took more pronounced strides reducing near-term debt.   Speculative-grade nonfinancial maturities in 2024 declined by 44% during 2023 and this pace of reductions in the upcoming year's maturities is consistent with what we saw in 2022. Meanwhile, companies also made progress chipping-away at maturities in 2025 (down 27% during the year) and 2026 (down 8%). The pace of these reductions accelerated in the second half of 2023, when speculative-grade bond and leveraged loan volumes picked up as interest rates began to level off.

While this reduction in near-term maturities should help to ease current pressure on borrowers, the newly issued debt is adding to the maturities due in 2028--when speculative-grade nonfinancial maturities peak at over $1 trillion. These 2028 maturities were already elevated at the beginning of 2023, and they rose by a further 24% during the year.

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Even though borrowers have made progress reducing near-term debt, pressures remain.   The median maturity for a speculative-grade nonfinancial debt instrument shortened modestly over the past year, falling to 3.9 years (as of Jan. 1, 2024), from 4.0 years (as of Jan. 1, 2023).

Meanwhile, the median maturity for an investment-grade nonfinancial instrument shortened, to 5.9 years from 6.2 years. In part, this reflects a shortening of tenors of newly issued debt, as average new-issue tenors of both investment- and speculative-grade bonds declined in 2023. Separately, the median maturity of outstanding debt instruments has shortened as the maturities of pandemic-era debt draws nearer.

Nonfinancial corporate debt globally:

• Speculative-grade maturities escalate rapidly over the next five years; they more than double between 2024 ($218 billion) and 2025 ($461 billion), and then double again by 2028 (to $1.04 trillion).
• Investment-grade maturities, meanwhile, show slower and steadier growth, rising 10% between 2024 ($914 billion) and 2026 ($1.0 trillion), and then receding.
• The continued escalation of speculative-grade maturities contributes to the peak in 2028 when $1.89 trillion of nonfinancial corporate maturities comes due--55% of this year's nonfinancial maturities are speculative-grade.
• Maturities in 2028 are driven by debt issued during the start of the COVID-19 pandemic; nearly half was issued during the credit boom in 2020 and 2021 when financing conditions were easy, interest rates were at their lows, and investors were increasingly searching for yield.
• 2028 is set to be the earliest year where speculative-grade maturities exceed investment-grade.
• Conventionally, companies tend to refinance their debt 12-18 months in advance, therefore, refinancing needs in later years will add to issuers' demand for funding sooner.

Over the next 12 months:

• About 7.6% of total nonfinancial corporate debt is scheduled to mature, up from 6.8% one year ago.
• Of nonfinancial corporate debt maturing over the next 12 months, 80.8% is investment-grade.
• The utility sector accounts for the largest amount of debt maturing in 2024 at $139 billion, 91% of which is investment-grade. It is closely followed by the automotive sector, with $135 billion in debt maturing this year, 94% of which is investment-grade.
• More than 85% of the utility debt maturing this year is from issuers in the U.S. and Europe, the Middle East, and Africa (EMEA). While the issuers in EMEA largely have a stable outlook, outlooks are more negative in the U.S. Companies might need to raise substantial amounts of new debt as they are looking to increase investments, especially in power networks and renewables.
• The media and entertainment sector accounts for the largest share of speculative-grade debt maturing in 2024. Some issuers in the media and entertainment sector are affected by soft advertising spending on legacy media, including linear TV, and many lower-rated issuers are not well-positioned for higher interest burdens. However, U.S.-based issuers might profit this year from estimated record advertising expenditures for the presidential election.

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The greatest refinancing risk likely sits with the lowest-rated debt.   Debt rated 'B-' and lower rapidly escalates through 2028, rising from $58.4 billion in loans and bonds maturing in 2024 to $313 billion maturing in 2028. Adding to the pressures, in 2024 and 2025, maturities of 'CCC' category debt exceed that of 'B-' rated debt.

Loans and revolvers comprise most of this debt rated 'B-' and lower, and loans account for most of the annual growth in maturities through 2028.

Of this debt rated 'B-' and lower that is set to mature in the next two years, the health care sector accounts for the largest share (with $45.5 billion), followed by media and entertainment (with $23.9 billion). This health care debt is mostly from issuers in the U.S. and Canada, where we expect to see continued credit deterioration among the lowest-rated health care services issuers in the first half of 2024. Labor costs are expected to remain a long-term challenge for this sector.

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Fixed-Rate Debt Likely Faces Higher Rates When Refinanced

Speculative-grade debt is made up of a much higher share of floating-rate debt instruments, such as loans and revolvers, than investment-grade.   About 51% of speculative-grade debt is floating-rate, compared with 18% of investment-grade. Without sufficient hedges, borrowers with floating-rate debt are already feeling the squeeze of higher rates, borrowers with fixed-rate debt have until the debt reaches maturity and is refinanced before higher funding costs take effect.

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Financing costs are expected to decrease as central banks start cutting rates this year. S&P Global Ratings economists project rates in many economies to remain stable during the first half of the year and then gradually decline to 4.63% for the Fed funds rate and 3.25% for the European Central Banks's deposit rate at year-end 2024. Nevertheless, benchmark yields will be significantly higher than what they were when most of the maturing debt was issued. Therefore, issuers will likely have to face considerably higher costs when they refinance their debt.

For example, the median yield on a new-issue 'BBB' category bond in the U.S. in 2023 was 5.73%, more than double the yield from 2021. The 'BBB' category bonds set to mature in 2024 were issued with a median coupon of 3.6%, suggesting that if this debt is refinanced at current rates, then these borrowers would experience about a 2-percentage-point cost of funding increase on that debt that's to be refinanced.

For 'BB' category bonds, borrowers could experience about a 2.8-percentage-point cost of funding increase on the bonds maturing in 2024. However, as 'BB' bonds maturing in 2025 through 2028 have a higher median coupon (around 5.5%), the increased funding costs in those years looks to be less pronounced.

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So while borrowers with fixed-rate debt will face higher costs of funding on the debt as it matures, they have some time with only a small share of fixed-rate debt set to mature this year. And as interest rates are expected to begin falling later this year, market pricing in early 2024 has been constructive for credit. The eventual increase in funding costs may be less severe than they would be at current rates.

Financial Services Maturities Show Stability

About 10% of financial services debt is scheduled to mature over the next 12 months, and this proportion is roughly unchanged since the beginning of 2023.

While financial services maturities reach their peak sooner than nonfinancial, financial services maturities have a less dramatic increase between current-year maturities ($867 billion) and the peak ($1.09 trillion in 2025), which is 26% higher than current levels. By contrast, as current-year maturities for nonfinancial issuers are considerably lower than those of financial services, the rise in nonfinancial maturities to their peak in 2028 represents more pronounced increase of 67%.

Over the past year, financial services have made some progress reducing 2024 maturities, which are now 6% lower than they were at the beginning of 2023. Much of these near-term maturities consist of medium-term notes, and these 2024 maturities also include around $65 billion in new debt that was issued in 2023. Meanwhile, financial services issuers are also adding to the maturities in later years, as 2025 maturities rose by 14% over the past year, and 2026 maturities rose by 25%.

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Financial services maturities appear manageable in comparison to issuance volumes.   Since 2014, annual issuance volumes have remained in excess of $1.2 trillion annually, and this volume has held steadily higher than upcoming annual bond maturities, which remain below $1.1 trillion (see chart 14).

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

• Nearly all of this debt is investment-grade, and just 1.1% of it is rated in the 'B' or 'CCC' categories, which should help limit refinancing risk.
• Banks account for around 75% of the financial services debt maturing in the next 12 months.
• About 45% of this debt is from European issuers, and 26% is from those in the U.S.
• The majority of this debt (52%) is denominated in U.S. dollars, and 30% is euro-denominated.

For financial services debt maturing over the next 24 months (through Dec. 31, 2025) globally:

• Roughly $1.96 trillion is scheduled to mature over the next 24 months, and less than 5% of this is speculative-grade.
• The speculative-grade debt largely consists of debt from nonbank financial institutions, insurance brokers, and emerging market banks, as well as subordinated debt of European banks.
• The 'A' category is the largest (at 48.1%), followed by the 'BBB' category (at 25.1%);
• About 99% of this debt consists of bonds and notes; much of the near-term debt is composed of medium-term notes.

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Emerging Markets Maturities Decline After 2024

In the emerging markets (see appendix for definition), maturities peak in 2024 at $91 billion, and then steadily decline through 2028. About 12% of emerging market debt is scheduled to mature in 2024, and this share maturing over the next 12 months is up from 10% at this time last year.

Of the emerging market debt maturing in 2024 and 2025:

• $176 billion in debt rated with a global scale rating by S&P Global Ratings is set to mature through 2025, and 81% of this debt is investment-grade;
• By rating category, the 'BBB' category is the largest, accounting for nearly of debt maturing over 46% of the debt maturing during this period;
• By sector, the largest share of this debt is from financial institutions (with 41%), followed by the oil and gas sector (with 19%);

By currency, about 80% of this emerging market debt is U.S. dollar denominated. However, this represents debt with a global currency rating, which may encompass more foreign-currency issuance; and

• This emerging market debt predominately consists of fixed-rate debt, just 7% is floating rate instruments.

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Table 1

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Appendix

Table 2

Table 3

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Table 4

Table 5

Table 6

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 Jan. 1, 2024.

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.

In this study, we've aggregated maturity data into the following regions: U.S., Europe, rest of world, and emerging markets. We define those regions as follows:

U.S.: United States, American Somoa (United States), Bermuda, Cayman Islands, Guam (United States), N. Mariana Islands (United States), Puerto Rico, and U.S. Virgin Islands (United States)

Europe: Andorra, Anguilla (United Kingdom), Austria, Belgium, British Virgin Islands, British Indian Ocean Territory, Channel Islands, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Falkland Islands (United Kingdom), Faroe Islands, Finland, France, Germany, Gibraltar, Greece, Greenland, Guernsey, Holy See (Vatican City), Iceland, Ireland, Isle of Man, Italy, Jersey, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Mayotte (France), Monaco, Montserrat, Netherlands, Netherland Antilles, New Caledonia (France), Norway, Portugal, Reunion (France), San Marino, Sint Maarten (Dutch Part), Slovak Republic, Slovenia, Spain, St. Helena (United Kingdom), St. Pierre/Miquelon (France), Svalbard/Jan Mayer Islands (Norway), Sweden, Switzerland, United Kingdom, and Wallis/Futuna Islands (France)

Rest of world: Any country not included in either the U.S. or Europe.

Emerging markets (or EM-18): Argentina, Brazil, Chile, China, Colombia, Hungary, India, Indonesia, Malaysia, Mexico, Peru, Philippines, Poland, Saudi Arabia, South Africa, Thailand, Vietnam, and Turkiye

Related Research

• Global Financing Conditions: Cautious Optimism After Peak Rates, Jan. 25, 2024
• Ratings Performance Insights: 2023 In Review, Jan. 12, 2024