Corporate Debt is Just One Aspect of the National Debt Problem
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.
Dan Denning
for The Daily Reckoning Australia
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About the Author
Dan Denning is the author of 2005's best-selling The Bull Hunter (John Wiley & Sons). Dan draws on his network of global contacts from his base in Melbourne. He’s the managing editor of resource newsletter Diggers and Drillers and the editor of The Daily Reckoning Australia.
Comment by Michael Wyer on 27 August 2009:
Hi Dan,
Have been reading Daily Reckoning from the USA time in 2000. Just great reading. Also subscribe to D&D and ASC letters plus others in USA.
1. How about repeating the Debt Summit in Sydney?
2. On a bigger horizon how about planning a Wealth Symposium for Sydney along the lines of Vancouver. I have had their tapes a couple of years and had hoped to go this year but missed.
Keep up the fabulous work.
Mike