Strong issuance has supported the growth of global rated corporate debt outstanding--it reached $23.98 trillion as of July 1, 2024, up 3.3% ($776 billion) over the past 12 months. Investment-grade, which increased by 4.0% ($718 billion), primarily drove the growth, while speculative-grade debt increased by 1.1% ($58 billion).

This divergence is partially due to rating activity. The associated debt of rising stars (issuers upgraded to investment-grade from speculative-grade) exceeded that of fallen angels (issuers downgraded to speculative-grade from investment-grade) by $170 billion over the 12 months to July 1, 2024. As a result, the share of investment-grade global corporate debt increased to 78.0%.

By region, the debt level increased slightly faster in Europe (3.9% over the 12 months to July 1, 2024) than in the U.S. (3.7%), keeping the regional distribution of global debt largely unchanged.

Chart 1

Investment-grade bond issuance has been very strong--notably up 16% up over the first half of this year. Since investment-grade-rated issues tend to have more fixed-rate debt, longer tenors, and stronger interest coverage measures, they've been less affected by higher rates than speculative-grade issuers. Many issuers took advantage of strong investor demand, driving strong issuance volumes and supporting the increase in total investment-grade debt.

Chart 2

Meanwhile, speculative-grade bond issuance and loan volumes jumped by more than 80%. Even though most issuers expected interest rates to start falling in the second half of 2024, they were enticed by strong investor demand and ready access to markets. Proceeds from the majority of this speculative-grade issuance were marked for refinancing.

Chart 3

Chart 4

Financial Services Drive Increase In Debt Outstanding

Financial services showed more pronounced growth than nonfinancial corporate sectors. Even though financial services account for just over one-third of total rated debt, they accounted for 59% of debt growth over the 12 months to July 1, 2024.

The divergence in debt growth is even more pronounced when it comes to lower-rated debt: financial services drove all of the increase in speculative-grade debt ($80.5 billion) over the 12 months to July 1, 2024, while the level of nonfinancial speculative-grade-rated debt outstanding declined by $22.5 billion.

Table 1

Most of the decline in debt came from 'BB' rated nonfinancial issuers, followed by 'CCC' and below rated issuers. Debt from nonfinancial issuers rated 'BB' declined by 4.8% ($94.3 billion) and by 1.1% ($5.3 billion) from 'CCC' and below rated issuers as of July 1, 2024, compared with a year earlier.

The drop in 'BB' rated debt, and subsequent increase in 'BBB' rated debt, is partly due to rising stars. Nonfinancial corporate rising stars totaled 32 in the 12 months to July 1, 2024, including Ford Motors in October 2023, which affected $113 billion of debt.

The decrease in 'CCC' and below rated debt was partly the result of numerous defaults. While the 'CCC' category contains the smallest share of rated debt (at 2.1% globally), it holds the most vulnerable issuers.

Speculative-Grade Issuers Tend To Have Smaller Debt Amounts Than Their Investment-Grade Counterparts

Among rated corporate issuers, investment-grade represents 52% of the issuers, but accounts for 78% of rated debt. Speculative-grade issuers are generally smaller, with lower revenue and lower debt, even though they have higher leverage than investment-grade issuers.

Chart 5

The U.S. Accounts For Half Of Global Rated Corporate Debt

By region, U.S.-based issuers (including Bermuda and the Cayman Islands) account for the largest share (51%) of rated debt globally, with $12.1 trillion. Compared with the other regions, nonfinancial companies account for a significantly higher share of corporate debt in the U.S., which at 74% is much higher than in the rest of the world. This in part reflects the highly developed capital markets and the high degree of banking disintermediation in the U.S.

In Europe, a considerably higher share of the $8.36 trillion in total debt is from financial services (at 49%).

Table 2

By country, the U.S. (excluding Bermuda and the Cayman Islands) accounts for the largest share of rated corporate debt globally with 50% ($11.9 trillion). Meanwhile, the U.K., France, Germany, and Canada each has over $1 trillion of associated debt, and together account for 24% of rated global corporate debt.

Table 3

Utilities And Telecom Have The Highest Amounts Of Rated Debt

Among nonfinancial sectors, the larger and more capital-intensive sectors have the highest amounts of debt outstanding, led by utilities and telecommunications, with 15% and 11%, respectively. Telecommunications also had the highest decline in debt compared with a year earlier.

Media and entertainment has the highest amount of speculative-grade-rated debt (16% of the nonfinancial total) and the highest proportion of speculative-grade debt outstanding at 65%, which is slightly up from a year before. Across all nonfinancial debt outstanding, the share of speculative-grade stands at 30%. Among financial services issuers, about 92% of total debt outstanding is investment-grade, and most is from financial institutions, such as banks and brokerages.

Table 4

Rated U.S. Corporate Debt Growth Accelerated

Rated corporate debt in the U.S. increased by 3.7% over the 12 months to July 2024, to $12.2 trillion. This compares with a 1.4% growth over the previous 12-month period.

• Investment-grade was the main driver of this growth, with $377 billion, as its debt level increased by 4.4% from July 2023. As of July 1, 2024, it reached $8.94 trillion.
• Meanwhile, speculative-grade debt increased by 1.7% (to $3.24 trillion) following a period of decline between mid-2022 and early 2024.
• Debt in all ratings categories except for 'BB' increased. The highest increases were among 'A' and 'BBB' categories, which also have the largest amounts of debt outstanding.
• On the back of stronger growth in investment-grade-rated debt, its share of total rated U.S. corporate debt increased slightly to 73.4%.

Chart 6

• The 'BBB' category is the largest by dollar amount, with 40.1% of the total, followed by the 'A' category with 27.3%.
• In terms of issuers, the 'B' category stands out as it accounts for the largest share of U.S. issuers (with close to a one-third), yet only 12.5% of rated debt. Speculative grade rated issuers tend to have smaller amounts of debt outstanding.

Chart 7

Table 5

• The utilities sector has the largest amount of debt among nonfinancial corporate sectors, with $1.25 trillion, followed by high technology (with $1.02 trillion) and telecommunications (with $941.9 billion).
• Media and entertainment has the highest share of speculative-grade debt, at 65%, while its total debt represents 10% of nonfinancial corporate sectors' debt outstanding.
• Meanwhile, utilities has the lowest share of speculative-grade-rated debt at 13% and the sector represents 13% of total outstanding nonfinancial debt.
• The share of speculative-grade-rated debt is 31% across all nonfinancial corporates and 13% across financial corporates.

Table 6

• Bonds, notes, and preferred securities account for most U.S. rated corporate debt at 83%, broadly in line with the prior year (see table 7).
• Among financial services, rated debt in the U.S. predominately consists of bonds, notes, or preferred securities (at 94.1%) as loans and revolvers make up less than 6% of the total.
• Among nonfinancial corporates in the U.S., a higher share of debt consists of loans and revolving credit facilities (at 21.1%), which tend to be floating rate.
• Speculative-grade debt is more evenly split between bonds/notes and loans/revolvers, and issuers of floating rate loans and revolvers will face the squeeze from higher interest rates sooner than issuers of fixed rate debt. Loans and revolving credit facilities account for 53% of U.S. speculative-grade debt, up from 12 months ago.

Table 7

European Rated Corporate Debt Increased By Nearly 4% Over The Past 12 Months

European rated corporate debt increased by 3.9% over the 12 months to July 2024, a deceleration from the 5.4% growth a year earlier. Investment-grade-rated debt was mainly responsible for the growth, up by 4.3%. Speculative-grade-rated debt increased by 1.9%.

Chart 8

• European corporate debt totaled $8.36 trillion as of July 1, 2024. Investment-grade debt accounted for 83% ($6.91 trillion), speculative-grade for 17% ($1.45 trillion).
• While investment-grade contributed more than 90% of the increase in outstanding debt from July 2023, speculative-grade-rated debt expanded as well. This follows a period of decreasing speculative-grade-rated debt since the first half of 2022.
• The 'BBB' rating category contributes the highest share of rated European corporate debt with 24% ($140 billion), followed by 'A' rated debt, which contributes 18% ($117 billion) as of July 1, 2024. Both rating categories increased by close to 5% from the previous year.
• Debt rated 'CCC' and below jumped by nearly one-third from the previous year, by far the biggest increase. However, this represents only $25.9 billion, and the rating category's share of total debt outstanding remains below 1%.
• The increase in debt rated 'CCC' and below resulted in part from downgrades. 'AAA' and 'BB' are the only rating categories that saw a decrease over the 12 months to July 1, 2024, by $7 billion and $39 billion, respectively.

Chart 9

• Nonfinancial companies account for 51% of European corporate debt, and 27.5% of this ($1.18 trillion) is speculative-grade debt.
• The $4.07 trillion in European financial services debt is predominately investment-grade. This includes $648 billion rated 'AAA', which includes secured debt, such as covered bonds, that may be rated higher than the corresponding issuer.

Table 8

• The utilities sector had the most debt outstanding, at $630.8 billion, 90.3% of which is rated investment-grade.
• The retail and restaurants sector and the media and entertainment sector have the highest shares of their debt rated speculative-grade (at 69.5% and 64.9% respectively). Changing consumer preferences and spending patterns have challenged both of these sectors.
• With $233.8 billion, telecommunications continues to account for the largest amount of speculative-grade debt, followed by consumer products with $147.8 billion.

Table 9

• Bonds, notes, and preferred securities account for most European rated corporate debt, at 91% (see table 10).
• Nearly all rated debt in the financial sector in Europe is in the form of bonds, notes, or preferred securities.
• For European nonfinancial corporate entities, 17% of debt is loans and revolving credit facilities.
• Loans and revolving credit facilities account for 41% of speculative-grade debt, in line with their share 12 months ago. The share of nonfinancial speculative-grade debt that is loans and revolving credit facilities declined to 49% from 50%.

Table 10

Appendix

Table 11

Table 12

Table 13

Chart 10

Chart 11

Chart 12

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, 2024.

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-level 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 globally and among regions:

• U.S. and tax havens: U.S., Bermuda, and the Cayman Islands
• 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, Brazil, Chile, China, Colombia, Hong Kong, India, Indonesia, Macau, Malaysia, Mexico, Peru, Philippines, Poland, Saudi Arabia, South Africa, Taiwan, Thailand, Turkey, Vietnam

Related Research

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• Global Financing Conditions: Early Issuance Should Support Growth Through Second-Half Slowdown, July 29, 2024
• Global Credit Markets Update Q3 2024: On An Upward Curve, July 29, 2024
• Q2 2024 Global Refinancing Update: Window Of Opportunity May Be Closing, April 24, 2024