Global corporate net debt is down for the first time in eight years. The Henderson Corporate Debt Index study
Between 2021 and 2022 global net debt of companies is decreased by 1.9%, amounting to 8.150 billion dollars, with a reduction of 0.2% at constant currency. And the first time in eight years. In particular, debt in Europe fell by 1.3%, e in Italy of 9%. To say it is the Janus Henderson Corporate Debt Index.
According to the London-based company’s latest annual publication, companies from all over the world are staying repaying debts for the first time since 2014/15. The operating profits increased by 51.4%, reaching record figure of 3.360 billion dollars, with a significant increase in liquidity, which made it possible to finance capital expenditures, pay off record dividendscarry out share buybacks and service and repay the debt.
In particular, the report states, a quarter of the companies of the Janus Henderson Index has no debt: these are companies that have a combined net liquidity of $ 10 trillion, half of which belongs to nine large companies, which include technology companies from different sectors, such as Alphabet, Samsung, Apple and Alibaba.
“Debt sustainability measures have improved markedly, with a global debt-to-equity ratio down by 5.7 percentage points to 52.6% and three-quarters of the sectors improving. The percentage of operating profit absorbed by interest expense is dropped to the lowest in the eight years since the index existed, only 11.3%, thanks to low rates and high profit margins “, notes Janus Henderson.
“For the next year Janus Henderson expects a further decline in debt, as rising financing costs and the slowdown in the economy push companies to be more cautious. Janus Henderson estimates that the net debt will drop by $ 270 billion (-3.3%) at constant currency, reaching $ 7.9 trillion within the next year “, explains the wealth manager.
“Net debt in 2021/2022 fell by 1.3% in Europe (excluding the UK) at parity of currency, despite a wide divergence between countries. debt fell notably in Norway, Italy and Switzerland, but also in Austria and Benelux.
“As far as Italian companies are concerned, net debt fell by 9.0% at the same exchange rate thanks to the increase in profits and the decrease in investments for the group Atlantia and the auto maker’s decline in sales Stellantiswhile it is increased debt for utilities“, he has declared Federico PonsCountry Head for Italy of Janus Henderson Investors.
“The biggest change was in energy sector: Oil and gas producers reduced debt by $ 155 billion, a one-sixth decline from the previous year, thanks to the surge in energy prices, which resulted in a significant turnaround for the sector . The rapidly growing liquidity of international mining companies has allowed them to reduce debt by a quarter, “the report reads.
As for the other sectors, “the shortage of components limited car sales, but favored a sales mix with higher margins, reducing the need to finance car manufacturers’ consumer credit programs, ”the report concludes.
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