The wheels are in motion for Friday’s Debt Summit at the State Library of Victoria. Today’s Australian reports that corporate Australia, “is sitting on a $200 billion debt bomb that needs to be refinanced over the next three years, with analysts warning some infrastructure and small companies will collapse under the mountain of debt.”
“Available information suggests companies face $38.5bn of debt maturities next year, another $97.3bn maturing in 2011 and $64.7bn in 2012,” reports Adele Ferguson. “But the problem could be even worse. Data on corporate debt in Australia is based on publicly accessible databases and does not include private deals companies do with banks, so the real debt figure could be much higher than $200bn.”
“Infrastructure is the biggest worry, with more than $31bn in refinancing due at a time when asset prices are crashing amid funding pressures, tight credit markets and carbon tax uncertainties. Property is also vulnerable, with more than $26bn of near-term debt due, and finance companies have $17bn of debt due in two years and another $3.4bn maturing in 2012.”
It’s become popular lately to pay for debt with new equity raisings. But that’s going to be harder for smaller companies. And do you think Aussie banks are eager to expand their loans books right now? Hmm.
Of course corporate debt is just one aspect of the national debt problem. There’s household debt. There’s government debt. And then there’s net foreign debt, or how much Australians owe to foreign lenders. More on that tomorrow.
for Markets and Money