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S&P Opens The Pandora's Box: The Wall Of Refi Worry Is $46,000,000,000,000 Tall

Tyler Durden's picture


In what S&P calls a 'Perfect Storm', the next four years will see a minimum of $30 trillion in companies' refinancing needs related to maturing bonds and loans and further they expect $13-$16 trillion more debt will be required to finance growth. With bond portfolios over-stuffed with corporate debt (since angst over sovereign risk has skewed asset allocation away from that cohort) the rating agency is concerned that ongoing bank deleveraging, these huge debt re-funding requirements, and the diminishment of central banks and governments to do anything about it leave serious problems with a credit overhang so large. Critically, especially as we hear calls for 'growth' plans from Europe, is the increasing likelihood that, as Reuters reports, this will potentially influence corporate credit quality and "alter the fragile equilibrium that currently exists in the global corporate credit landscape". While S&P expect the refinancing needs may well be met "This global wall of nonfinancial corporate debt will potentially compound the credit rationing that may occur as banks seek to restructure their balance sheets, and bond and equity investors reassess their risk-return thresholds" which "raises the downside risk in global markets" as an inability to finance growth may well be the catalyst for another risk flare. "Governments and central banks have less fiscal and monetary flexibility to prevent serious problems emanating from future market disturbances. A perfect storm scenario would likely cause financing disruptions even for borrowers that are not highly leveraged."


Of course the size of this massive refinancing wall dwarfs the recent discussion of how much of Europe's financial system's equity market cap is nothing but vaporware - since we note that 30% of this $30 trillion is for European financials and corporations.


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Thu, 05/10/2012 - 14:07 | 2413969 kahunabear
kahunabear's picture

Hmm, with rates so low, I assumed the credit quality was excellent! Is that not how it works?

Thu, 05/10/2012 - 14:11 | 2413988 fourchan
fourchan's picture

pump and dump.

Thu, 05/10/2012 - 14:27 | 2414068 Oh regional Indian
Oh regional Indian's picture

Timeless, priceless, multiply applicable cartoon! Say it all and more.

This wall is not meant to be climbed, only see how far they can take it before it does it's logical, collapse thing.


Thu, 05/10/2012 - 14:48 | 2414155 Manthong
Manthong's picture

This would seem to indicate that corporations in a tight credit market and contracting economy will start aggressively paying down their debt, stop buying their own shares and issue more shares. Banks will be able to see their holdings of pesky good corporate debt decrease. Cutbacks and layoffs will continue to increase morale (and confidence) and government will be raising lots of new revenue with all the new high taxes coming.

Wow, what else could you ask for?

Thu, 05/10/2012 - 15:15 | 2414273 Darth..Putter
Darth..Putter's picture

Bridge, levy, and dam repair for all!

Fri, 05/11/2012 - 06:07 | 2416503 Element
Element's picture

2009's greenshoots sure are getting 'expensive' (a word that's rapidly losing all meaning).

Thu, 05/10/2012 - 19:57 | 2415487 Buck Johnson
Buck Johnson's picture

The market is so manipulated that you can't go by the old ways of doing things anymore. 

Thu, 05/10/2012 - 14:08 | 2413972 mayhem_korner
mayhem_korner's picture



Private sector insolvency seems like a commercial time-out from all the juicy sovereign stuff.

Thu, 05/10/2012 - 14:08 | 2413975 lolmao500
lolmao500's picture

What about ZH posting something about the dictatorship of the ESM???

Thu, 05/10/2012 - 14:35 | 2414106 Tyler Durden
Thu, 05/10/2012 - 15:16 | 2414270 LFMayor
LFMayor's picture

remember the film?  To beat the Tyler, you have to first shoot yourself in the pie hole.

Thu, 05/10/2012 - 15:29 | 2414321 catacl1sm
catacl1sm's picture


Thu, 05/10/2012 - 14:09 | 2413978 William113
William113's picture

Oops my bad.

Thu, 05/10/2012 - 14:10 | 2413983 surfwon
surfwon's picture

Oh this is so bullish........I'm sure this is good for 40 spx points

Thu, 05/10/2012 - 14:13 | 2413991 mayhem_korner
mayhem_korner's picture



Does "$13 to $16 trillion to finance growth" mean to finance the growth of the debt-service obligations from the upcoming re-fi?  Or is S&P deluded into thinking growth in real economic activity is going to magically take hold?  Inquiring minds want to know...

Thu, 05/10/2012 - 15:30 | 2414327 catacl1sm
catacl1sm's picture

all we need is more credit (debt) to grow, duh. /sarc

Thu, 05/10/2012 - 14:14 | 2414001 Jason T
Jason T's picture

in all sincerity, when rates go up, the world is doomed.  

Thu, 05/10/2012 - 14:18 | 2414018 mayhem_korner
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Rising i-rates = capital rationing on HGH

Thu, 05/10/2012 - 14:22 | 2414039 Dr. Engali
Dr. Engali's picture

Exactly why rates won't be allowed to go up and the central banks will continue their musical chairs game with easing.

Thu, 05/10/2012 - 14:47 | 2414153 Al Huxley
Al Huxley's picture

Exactly.  Monetization is all that's left now (although they'll continue to create clever schemes and names to try and hide it).

Thu, 05/10/2012 - 14:52 | 2414170 NotApplicable
NotApplicable's picture

Don't forget the tried and true tactic of deny, deny, deny!

"QE? Nope, sorry, never heard of it."

Thu, 05/10/2012 - 15:37 | 2414354 jamezelle
jamezelle's picture

yup, extend and pretend till it blows up in our faces.

Thu, 05/10/2012 - 14:33 | 2414007 Quinvarius
Quinvarius's picture

No bank is going to lend anything to the public or corporations as long as they can lend to the government notional risk free.  So good luck force feeding that golf ball to your snake.

Even people worthy of loans are being turned down.  And rightly so.  Why take any risk?  We have a banking system that does not function as a banking system.  Effectively, our banking system was destroyed in 2008.  It doesn't matter if their shares still trade on an exchange.  Our banks no longer do banking.  Our banks business is lending the government back its own money that they just borrowed from it...oh...and gambling.

Thu, 05/10/2012 - 14:46 | 2414150 Greenhead
Greenhead's picture

Classic "crowding out" of the private sector with all the government borrowing. 

Thu, 05/10/2012 - 15:52 | 2414397 xela2200
xela2200's picture

Banking sector was broken when glass steagall act was repeal.

Thu, 05/10/2012 - 16:53 | 2414606 UP4Liberty
UP4Liberty's picture

I wish I could "opt out" of this financial system - and use a competing currency!


Fri, 05/11/2012 - 06:36 | 2416522 Element
Element's picture

And as in late 2008, those banks are simply putrefying zombies, they are undead toxic corpses that poison every economy and society they are decaying in today. 

Spain is a classic case of societal and economic toxic-shock from having so many decaying undead zombie banks still on the books.

These banks will close.  We made the mortal mistake of not voluntarily closing them in 2009, because the toxic-banksters and toxic economists kept banging-on about avoiding a depression, and Bernanke got a TIME man of the year pat on the head, for making sure we all carried around toxic-zombie corpses for the next few years, as they still attempt to bite and eat us. 

But these will all collapse, anyway.

These banks are our enemy.  It's these zombie banks who are taking us down the path to hell and decay.  All these countries are carrying around rotting corpses that are making everything dysfunctional with the stench of impossible to service and pay-down debts.  We need to cut them lose right now.  How can there be any so-called 'freedom' or justice in this world, when that's what we're carrying around on behalf of a moneyed elite?

And the toxic-politicians, still left over from the old-normal era, who still decay and stinketh themselves, are helping the banks and the toxic-IMF, every step of the way down toxic-bailout zombielande road.



Thu, 05/10/2012 - 14:17 | 2414011 LawsofPhysics
LawsofPhysics's picture

Gee look at that, apparently those private companies are not run much better than the government.  Excuse me if I am not that suprised.  Fuck the paper pushers, they have brought this upon themselves.

Anyone ready to have an adult conversation about making sure compensation actually goes to people who's labor is of real value?  < crickets >

Peak cognative dissonance. 

Thu, 05/10/2012 - 14:19 | 2414033 dark pools of soros
dark pools of soros's picture

then the unwashed would be washed... we can't have that

Thu, 05/10/2012 - 14:20 | 2414035 xtop23
xtop23's picture

^ that

Thu, 05/10/2012 - 14:32 | 2414090 Seize Mars
Seize Mars's picture

"Anyone ready to have an adult conversation about making sure compensation actually goes to people who's labor is of real value?  < crickets >"

I am ready to have that conversation.


Thu, 05/10/2012 - 14:47 | 2414146 LawsofPhysics
LawsofPhysics's picture

Then you should be in politics.  The real issues - "wealth" extraction without adding or creating anything of real value continues.  In a nutshell, capital/resource mis-allocation and mal-investment.  It will continue to be so until the fucking fraud is prosecuted and rule of law is restored.  This can be done in an orderly fashion, or not.  

But I suspect, largely from your response, that you are probably too honest for politics and most people do not like the truth.

Thu, 05/10/2012 - 16:23 | 2414488 Seize Mars
Seize Mars's picture

1) Hire someone and pay them $100,000 because they are "worth it."

2) Send the government matching 6.2% for Social Insecurity, 1.45% Medicare and another 6.00% match for unemployment "insurance."

3) The employee now costs you 114,000. His paycheck reflects the withholding of (let's say) 30% Federal and state tax. The guy actually takes home 70,000.

This is lost on most people. The guys costs 114,000 but receives 70,000.

If - and this is a big if - he can manage to save any money, of course according to ShadowStats the buying power of that savings is evaporating at about 20% per year. All of this so that you can listen to them call you a terorist if you don't like it. Even better is when they say you are "greedy" because you would like to keep what you earn.

Also don't forget that the above 44,000 that goes to Uncle Sham is absolutely spent - every penny, and more - every year. Nice.

This is the ultimate malinvestment.

Fri, 05/11/2012 - 06:48 | 2416530 Element
Element's picture

Nicely put, I can tell that you were once in small-business too.

Thu, 05/10/2012 - 14:22 | 2414042 Zero Govt
Zero Govt's picture

there isn't enough credit to go around

let the musical chairs begin

Thu, 05/10/2012 - 14:23 | 2414046 JustObserving
JustObserving's picture

For about $5 trillion, you can easily buy all the gold and silver bullion in the world.  Central banks will have to print tens of trillions since savings rates are so low in western economies.

That should be bullish for gold and silver unless the Fed keeps intervening in the precious metals markets.

Thu, 05/10/2012 - 14:31 | 2414070 LawsofPhysics
LawsofPhysics's picture

You are getting at the only question that now matters.  How long are the people of the world willing to let the private banking cartel, known as The Federal Reserve, front-run themselves in the same "markets" that they are manipulating?  Ever stop to think about where all those interest payments are going?

Thu, 05/10/2012 - 14:29 | 2414079 Quinvarius
Quinvarius's picture

According to keynesians everything is bullish for gold because gold as money is inherently deflationary.  So as we progress, the price of gold should always skyrocket.  That is what they fear, because for some reason low prices are bad.  Yet for some mysterious reason, gold has only doubled since 1980.


Thu, 05/10/2012 - 14:33 | 2414095 LawsofPhysics
LawsofPhysics's picture

cherry-pick much?

Thu, 05/10/2012 - 14:34 | 2414112 Quinvarius
Quinvarius's picture

How delicious is your cherry?

Thu, 05/10/2012 - 16:56 | 2414626 UP4Liberty
UP4Liberty's picture

According to Benny B., gold isn't money - he sez it's an asset.  I disagree.  I think he's an "ass", and gold is money.  The US is effectively guaranteeing that gold will be used as money by cutting other nations out of the SWIFT system.  We are literally cutting our own throats...sheesh...

Thu, 05/10/2012 - 16:14 | 2414460 LoneCapitalist
LoneCapitalist's picture

JustO   Not all of it. Im waiting for a much higher price.

Thu, 05/10/2012 - 16:27 | 2414506 Dr. No
Dr. No's picture

For about $5 trillion, you can easily buy all the gold and silver bullion in the world.


I disagree.  As you start to buy your $T in gold, price goes up.  Ask Hunt Bros.  $50/oz and counting till their privileges were revoked.  Classic "current market value" problem.

Thu, 05/10/2012 - 14:27 | 2414064 johnjkiii
johnjkiii's picture

Get out your bayonet repellent


Thu, 05/10/2012 - 15:23 | 2414297 LFMayor
LFMayor's picture


Thu, 05/10/2012 - 14:30 | 2414081 fonzannoon
fonzannoon's picture

When is Moody's going to downgrade the banks?

Thu, 05/10/2012 - 14:29 | 2414082 SheepDog-One
SheepDog-One's picture

Gee, well cant we just bask in normalcy bias and say Bernank will just print and cover it?

Thu, 05/10/2012 - 14:34 | 2414107 Clint Liquor
Clint Liquor's picture

Absolutely! The Bernank can create $46 Trillion as fast as you (or someone at the FED) can type it.

Thu, 05/10/2012 - 14:40 | 2414129 Poetic injustice
Poetic injustice's picture

That takes more time, as he has to triplecheck amount of zeros. You wouldn't want too see Fed mistake adding 2 or 3 more zeros to 46 trillion...

Thu, 05/10/2012 - 15:24 | 2414298 Clint Liquor
Clint Liquor's picture

2 or 3 more zeros would be great! Just think how much more Krugman prosperity would be created.

Thu, 05/10/2012 - 15:34 | 2414338 catacl1sm
catacl1sm's picture

We should replace 'prosperity' with 'Krugman'. Seems only fair. Live long and Krugman, bitchez.

Thu, 05/10/2012 - 15:39 | 2414353 Poetic injustice
Poetic injustice's picture

Doubleplusgood message! And multiply can be replaced with Bernanke.

"Bernanke and Krugman", said voice from heavens.

Sat, 05/12/2012 - 08:59 | 2419642 Lost Wages
Lost Wages's picture

Fat Finger Fed.

Fri, 05/11/2012 - 06:59 | 2416536 Element
Element's picture

The Bernank can create $46 Trillion as fast as you (or someone at the FED) can type it.


Nah, they have an algo function that just auto-types-prints-clicks it in for them. 

You set it to 'Liquidate' and off it goes, monetising everything.

Thu, 05/10/2012 - 14:31 | 2414087 junkyardjack
junkyardjack's picture

Didn't we have that like 3 years ago as "the next crisis" and then it all went by without a hitch?

Thu, 05/10/2012 - 14:34 | 2414109 SheepDog-One
SheepDog-One's picture

Totaly without a hitch, we dont have any more debt or nothin!

Thu, 05/10/2012 - 14:32 | 2414098 Lokking4AnEdge
Lokking4AnEdge's picture

If they are right (and I am sure they are...) than we can see a very competitive market for loans, with sellers competing using higher rates. This will give an environment of ever rising interest rates.

A core holding in any portfolio from now on should be anything that will benefit from rising interest rates, such as "TBT" and such.

Thu, 05/10/2012 - 14:39 | 2414104 Shizzmoney
Shizzmoney's picture

Cliffs: "We're fucked"

BTW, get used to the "Perfect Storm" analogy for this next crash.  Roubini, Faber, used it in their latest intervieww; and will most likely be rehashed when the fail-onomy collapses.

Thu, 05/10/2012 - 14:37 | 2414111 q99x2
q99x2's picture

Credit Cards are sprouting from mailboxes again. How long do you get to keep a car if you purchase it with a subprime car loan and don't make a payment? If it is two years like a house I may be fixin to get me one.

Thu, 05/10/2012 - 14:39 | 2414122 curbyourrisk
curbyourrisk's picture

A huge portion of those debts are in the for of PIK notes/bonds.  This is the deadliest kind fo debts.  I think theer will be a large number of mid-sized companies that go TITS UP OVER THIS.  Especially those that were acquired via Private Equity. 


Debt for equity swaprs galore coming out of this.  Sun Capital, Cerberus, Goldman Sachs, etc. etc. - no one will be immune

Thu, 05/10/2012 - 15:53 | 2414401 chet
chet's picture

Making companies go tits up is how Private Equity "creates value."  It's just our nation's most talented meritocratic superstars earning their just desserts.

Thu, 05/10/2012 - 16:52 | 2414602 mrdenis
mrdenis's picture

Anybody know where I can get a PIK mortgage ? sending in a few shingles every month would be OKEYDOKEY

Thu, 05/10/2012 - 14:54 | 2414138 falak pema
falak pema's picture

when trillions become common place and our global financial Corpocracy shows is debt ridden face; like a Bourbon king who can't stop fukking young girls, having lost all hope of resuscitating his kingdom and lost all his colonies; his name : Louis XV, his legacy the revolution. Keep your eyes focussed on when an Empire falls. The US private corpocracy cannot manipulate the world for long, even though it controls the FED, with such a skyscraper of funny money debt. It will lead to funny money collapse, like night follows day, and the Euro is just for starters.

But it's government buddies can start wars, as they, the nuke kings of the planet, are not yet Louis XV but Louis XIV...Two faced empire.  

Thu, 05/10/2012 - 15:04 | 2414222 steve from virginia
steve from virginia's picture


Private sector non-financial is having little problem finding credit now, why would it be more difficult of the funding 'competition' is having a migraine (dying of cancer)?

The choice isn't that hard.

Thu, 05/10/2012 - 15:05 | 2414231 Sudden Debt
Sudden Debt's picture

Better all be nice to your bosses boys and girls because they'll be on pink sheet rounds the comming years!

Thu, 05/10/2012 - 15:09 | 2414243 ebworthen
ebworthen's picture



I'm hearing 2.99% equity line of credit commercials.

Wonder how many pension funds will buy into the new bubble debt instruments?

Thu, 05/10/2012 - 15:30 | 2414328 Sudden Debt
Sudden Debt's picture

Well, almost every single one of them is under capitalized and refinancing also requires the write off past loses

Thu, 05/10/2012 - 15:14 | 2414259 Miss Expectations
Miss Expectations's picture


In an increasingly technological world, where almost everyone relies on cell phones and GPS controls not just your in-car map system, but also airplane navigation and the extremely accurate clocks that govern financial transactions, space weather is a serious matter.

Source: redOrbit (

In an increasingly technological world, where almost everyone relies on cell phones and GPS controls not just your in-car map system, but also airplane navigation and the extremely accurate clocks that govern financial transactions, space weather is a serious matter.

Source: redOrbit (

In an increasingly technological world, where almost everyone relies on cell phones and GPS controls not just your in-car map system, but also airplane navigation and the extremely accurate clocks that govern financial transactions, space weather is a serious matter.

Source: redOrbit (

Thu, 05/10/2012 - 15:23 | 2414299 michaelsmith_9
michaelsmith_9's picture

Part of this perfect storm is a strong USD that is coming, which should be a big warning sign for the markets, as it continues to set up for a big push higher.  This will likely result in a move lower for the stock markets and commodities.  I like the bullish side of the buck right now.

Thu, 05/10/2012 - 15:59 | 2414415 xela2200
xela2200's picture

Be careful. As an example, the EUR/CHF looks like an EKG reading of a race horse on cocaine.

Thu, 05/10/2012 - 15:33 | 2414333 FrederickTheGreat
FrederickTheGreat's picture

The same was said about Spain and Italy: tons of debt to be rolled over in 2012. Meanwhile, both countries have succeeded everytime so far and Spain has covered already half its need for 2012. The government has even money to nationalise Bankia. And if not, IMF/ECB/EU will pay. Greece will have a new government in a few days, headed by Venizelos. I go back into hibernation.

Thu, 05/10/2012 - 16:04 | 2414432 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

McKinsey was hired to do a study by some major banks, they wanted to estimate what credit demand would be like in the future. So McKinsey looked at it and said the world will need more debt in the next 30 years than in the last 30, just to keep any kind of economic "growth" going. They ran around with this presentation, the bosses wanted to use it to get the bankers all pumped up about how bright the future would be. I bet there were a few in the audiences who didn't smoke the hopium though...

Thu, 05/10/2012 - 16:10 | 2414443 earleflorida
earleflorida's picture

This is a perfect example of 'Carroll's Paradox', when one plays by a false set of rules made on a foundation of of 'Quick Sand'?


Ps. Once again the Greek's win?  

Thu, 05/10/2012 - 16:40 | 2414551 q99x2
q99x2's picture

Funny numbers. Enron accounting.

Repudiate the debt. Its worthless anyhow.

How do you make money on this crap unless you are the middle man. The debt is debt. That is why it is called debt. It is worth less than zero, nada, zilch. They call it junk, toxic assets, weapons of financial destruction and in the not too distant people are going to be thrown into jails for issuing the shit.

Thu, 05/10/2012 - 16:43 | 2414558 theprofromdover
theprofromdover's picture

Rollover the debt? They want to double it; there isn't a corporate officer in the land who cares about honoring ther bond debts. They have no loyalty to their shareholders or see any obligation to anything but their salary packages and bonuses. This is the brave new world.

The only way the banks are going to see a return is if they can engineer Congress into making shareholders responsible for company debts. The minute you see that kind of legislation being drafted, the game is over. They won't care about the share price, its the bond return they will sacrifice you for.

Thu, 05/10/2012 - 16:52 | 2414607 Clint Liquor
Clint Liquor's picture

shareholders responsible for company debts

I can see it order to make investing fair........

Thu, 05/10/2012 - 20:39 | 2415661 kevinearick
kevinearick's picture

and they just keep bidding against themselves...

Thu, 05/10/2012 - 20:48 | 2415702 smiler03
smiler03's picture

Greece burped.

Fri, 05/11/2012 - 00:04 | 2416209 LMAOLORI
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