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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kahunabear's picture

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

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.


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?

Darth..Putter's picture

Bridge, levy, and dam repair for all!

Element's picture

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

Buck Johnson's picture

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

mayhem_korner's picture



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

lolmao500's picture

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


LFMayor's picture

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

surfwon's picture

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

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...

catacl1sm's picture

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

Jason T's picture

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

mayhem_korner's picture



Rising i-rates = capital rationing on HGH

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.

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).

NotApplicable's picture

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

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

jamezelle's picture

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

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.

Greenhead's picture

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

xela2200's picture

Banking sector was broken when glass steagall act was repeal.

UP4Liberty's picture

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


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.



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. 

dark pools of soros's picture

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

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.


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.

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.

Element's picture

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

Zero Govt's picture

there isn't enough credit to go around

let the musical chairs begin

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.

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?

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.


Quinvarius's picture

How delicious is your cherry?

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...

LoneCapitalist's picture

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

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.

johnjkiii's picture

Get out your bayonet repellent


fonzannoon's picture

When is Moody's going to downgrade the banks?

SheepDog-One's picture

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

Clint Liquor's picture

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

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...

Clint Liquor's picture

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