To US Financial Professionals servicing non-US persons

Companies are repaying debts on a global scale

The Janus Henderson Corporate Debt Index – a long-term study into trends in company indebtedness around the world – shows that companies around the world are repaying debts for the first time since 2014/2015, with one-quarter of the companies in the index having no debts at all.

Key Takeaways

  • Global corporate net debt fell by 0.2% on a constant-currency basis in 2021/22 to $8.15 trillion.
  • Surging cash flow funded record dividends, share buybacks and debt repayment.
  • We expect indebtedness to fall further in the year ahead as higher funding costs and an economic slowdown push companies to be more conservative.

 

Key terms

High yield corporate bond: A bond which has a credit rating below an investment grade bond. It is sometimes known as a sub-investment grade bond. These bonds usually carry a higher risk of the issuer defaulting on their payments, so they are typically issued with a higher yield to reflect the additional risk.

Net debt: All borrowings minus cash or cash equivalents.

Yield: The income on a security typically expressed as a percentage rate. At its most simple, for a bond this is calculated as the annual coupon payment divided by the current bond price. 

Tom Ross, CFA

Tom Ross, CFA

Portfolio Manager


Jul 21, 2022

These are the views of the author at the time of publication and may differ from the views of other individuals/teams at Janus Henderson Investors. Any securities, funds, sectors and indices mentioned within this article do not constitute or form part of any offer or solicitation to buy or sell them.

 

Past performance does not predict future returns. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.

 

The information in this article does not qualify as an investment recommendation.

 

Marketing Communication.

 

Glossary

 

 

 

Tom Ross, CFA

Tom Ross, CFA

Portfolio Manager


Jul 21, 2022