Global corporate debt to drop amid higher funding costs: Study

Global corporate net debt has fallen by 1.9% to $8.15 trillion in the past year as higher borrowing costs reduce appetite for new financing and strong cash flows from years of accommodative monetary conditions help companies repay existing debt, a study of 900 top firms released on Wednesday showed.

Indebtedness is expected to decline by $270 billion in the coming year as companies take a more conservative stance due to higher interest rates and an economic slowdown, according to the corporate debt index by investment firm Janus Henderson, reports Reuters. It was based on the companies’ annual balance sheets as of June 1.

“Economic growth may slow or go into reverse, but companies are starting from a very profitable position,” said Seth Meyer, fixed income portfolio manager at Janus Henderson.

While the trend globally was to trim borrowings, U.S. companies’ net debt rose by 0.5% in the past year, the study found.

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