Improving financing conditions in the first quarter of 2024 presented a window of opportunity that many companies took to refinance upcoming debt. Although main central banks kept policy interest rates unchanged in the first quarter, investors' expectations for slowing inflation and upcoming interest rate cuts brought an exuberance to primary markets.

While investment-grade bond issuance was up 26% globally year over year in the first quarter, speculative-grade bond issuance was up 66%. In the past seven years, only 2021 saw a higher speculative-grade issuance in the first quarter. Leveraged loan volume also rebounded in the first quarter, more than doubling year over year, according to Pitchbook LCD.

While the supply of funding was up, investor demand remained robust. Speculative-grade spreads in the U.S. tightened to an all-time low of 246 basis points (bps) on March 21, and investment-grade tightened as well.

Taken together, this combination of stable interest rates, narrow spreads, and investor demand provided the window of opportunity for many companies to get ahead of upcoming maturities.

But markets change quickly, and financing conditions may be becoming more challenging. Recent higher-than-expected inflation readings have investors tempering their expectations for U.S rate cuts, and the conflict in the Middle East reveals intensifying geopolitical risk. Credit spreads are widening from their lows, and conditions for refinancing may be turning less favorable. (This report provides a new quarterly update on global refinancing demands, with data as of April 1, 2024. For the previous article, see "Global Refinancing: Maturity Wall Looms Higher For Speculative-Grade Debt," Feb. 5, 2024.)

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.

Strong first-quarter issuance supported refinancing

• The amount of rated debt from global financial and nonfinancial corporates maturing over the next 12 months (through March 31, 2025) is $2.06 trillion, up 3% from the beginning of 2024 as escalating maturities in first quarter 2025 are drawing nearer.
• While annual debt maturities are still scheduled to rise through 2026, the growth may be slowing. Debt maturing over the next 24 months is $4.56 trillion, a smaller 1% increase since the beginning of the year.
• Even though annual maturities rise through 2026, we've started to see some reductions in riskier, near-term speculative-grade maturities.
• The amount of speculative-grade debt maturing over the next 24 months is 1% lower (at $741 billion) than at the beginning of the year, and the amount of 'B-' and lower debt maturing over the next 24 months is 9% lower (at $194 billion).
• The amount of rated debt still to mature in 2024 (from April 1 through Dec. 31) declined by 6% during the first quarter, and this was led by a 17% decline in the amount of nonfinancial speculative-grade debt maturing.
• While robust issuance in the first quarter contributed to near-term refinancings, these also added to longer-term debt--particularly of debt maturing in 2029 (which rose by 13% during the first quarter of 2024).
• Meanwhile, near-term financial services maturities remained roughly stable, with maturities remaining in 2024 down by 4%, and 2025's unchanged.

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Near-term speculative-grade maturities grow swiftly

• Global rated corporate debt maturities peak in 2026 at $2.76 trillion, and then approach that level again in 2028 (when $2.74 trillion matures).
• For the remainder of 2024 (April 1 through Dec. 31), global rated corporate maturities (financial and nonfinancial debt) stand at $1.39 trillion.
• Financial services account for a relatively higher proportion of near-term maturities (43% of 2024 and 45% of 2025) as nonfinancial maturities rise more steeply from a lower level, and as there has been an uptick in the issuance of debt with shorter tenors by financial services in recent years.
• Speculative-grade accounts for an increase in annual maturities over the next several years. Only about 25% of nonfinancial corporate debt maturing through 2025 is speculative grade, but the share rises, and speculative-grade nonfinancial maturities exceed investment-grade in 2028.
• The 'B' category accounts for the majority of speculative-grade maturities through 2028, with annual totals growing sharply through 2028.
• The nonfinancial sector with the most debt maturing through 2025 is utilities, which has $235 billion maturing (10% of which is speculative grade).
• While the media and entertainment sector has the most speculative-grade debt maturing through 2025 (with $91.4 billion), the health care sector has the most debt rated 'B-' or lower maturing over this period (with $36.9 billion).

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Cost Of Funding Poised To Rise For Many Borrowers

Issuers will likely face higher costs when they refinance their fixed-rate debt (such as bonds and notes) that were issued back when interest rates were lower. While investors' optimism for rate cuts contributed to a dip in yields in the first quarter, the median coupon on newly issued bonds is rising in the second quarter in the U.S. as investors pare back their expectations sharply.

• In the U.S., 'BBB' bonds that are maturing later in 2024 have a median coupon of 3.6%, suggesting that these borrowers could face about a 2 percentage point increase in the cost of funding on the debt that's to be refinanced, based on primary market yields from the first quarter.
• In Europe, 'BBB' issuers could face an increase in their costs of funding (up around 2.3 percentage points) as the bonds maturing this year have a lower median coupon (at 1.8% for bonds maturing in 2024) than in the U.S. and as the median yield of newly issued bonds has risen by more than in the U.S. over the past two years.
• Meanwhile, 'BB' issuers in the U.S. could face a somewhat steeper 2.4 percentage point increase in yields (up from a median of 4.4% for bonds maturing in 2024).
• And, 'BB' issuers in Europe may face a more pronounced increase in funding costs (up 3.4 percentage points) as the median coupon of maturing bonds is lower (at 3%) than that in the U.S.

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Global Debt Levels Continue To Rise

Recent issuance has contributed to the growth in outstanding debt instruments during the first quarter.

• Global rated debt is $23.7 trillion as of April 1, 2024. This represents a 0.9% increase since Jan. 1, 2024. Global rated debt levels have been increasing continuously since mid-2022.
• Both investment- and speculative-grade debt increased during the first quarter of 2024, with investment-grade debt up $141 billion and speculative-grade debt up $71 billion.
• This marked the first increase in the total level of speculative-grade debt in nearly two years.
• Issuance added to the increase in speculative-grade debt, and it also helped to offset defaulted debt in the first quarter, when 33 nonfinancial corporate defaults accounted for $58.2 billion of rated debt.

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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 April 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 Refinancing: Maturity Wall Looms Higher For Speculative-Grade Debt, Feb. 5, 2024