IIF: Global corporate debt hit record high in 2018 H2

In a cautionary note from the Institute of international Finance, Reuters explains that non-financial corporate debt has hit a new record high as a decade of businesses borrowing their way out of recession continues,

Key quotes

Debt among non-financial corporations across the globe rose to a record high of $75 trillion in the second quarter, driven mostly by China and the United States, the Institute of International Finance said in a report.

“China’s corporate sector has some of the highest debt levels in the world,” the report, dated Tuesday, stated, though it said businesses based in the world’s second-largest economy also have significant “cash holdings (that) provide an important cushion against risk.”

Canada, India and Mexico rank first in nonfinancial corporate debt relative to cash holdings, the report said, while a “significant proportion” of Brazilian, Canadian, American and Chinese corporations still struggle to pay interests on their debt.

Bankers, executives and investors have warned the U.S. central bank that record leveraged lending to companies from lightly regulated corners of Wall Street could make any economic downturn harder to manage.

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