A first in eight years | Corporate debt decreased in 2022 worldwide

(Paris) The net debt of companies in the world fell between June 2021 and June 2022, according to the report by asset manager Janus Henderson published on Wednesday, a first since the start of the study eight years ago.

The net debt of companies, which represents their short and long-term debt less their cash, amounted to 8.151 billion dollars in June 2022, down 1.9% compared to June 2021, estimates Janus Henderson.

However, the majority of the decline can be explained by “the strength of the dollar”: “at constant exchange rates, net debt decreased by 0.2%”, notes the report.

This is the first time since the 2014-2015 period, during which the asset manager began its study, that corporate debt has decreased. It returns to its level of 2019-2021.

This therefore forms a plateau over three years, whereas the previous four years were marked by a sharp increase.

“After temporarily increasing their borrowing to cope with the pandemic”, companies “had a golden opportunity to start repairing their balance sheets”, with the explosion of their profits in 2021. Again in 2022-23, they have of “real leeway” if they want to reduce their debt, says Janus Henderson.

Companies in the technology sector are those with the most cash, primarily Alphabet ($111 billion), but also Samsung, China Mobile, Apple and Alibaba.

Conversely, automotive groups are among the most indebted companies (Volkswagen 2^eMercedes 6^eBMW 9^eFord 11^e). Toyota is the most indebted company, at 186 billion dollars, a figure stable compared to last year.

Same trend for telecommunications companies (AT&T 3^eVerizon 4^eDeutsche Telecom 5^e).

The decline in debt is more marked in Europe and the United Kingdom than in North America, where it is increasing slightly.

This first inflection could be the start of a more lasting trend because, after years of very low rates, “rising financing costs and the economic slowdown are pushing companies to be more cautious,” the report mentions.

This is particularly true for the most risky companies, where the interest rate has gone from 4.0% to 6.9% in one year.