Financial Associated Press News on November 14 ET Monday,S&P GlobalMarket Intelligence reports that as borrowing costs rise, global companies are experiencing a severe winter and profits have almost stagnated.
S&P data shows that since the beginning of this year, the number of global corporate bankruptcies has exceeded that of the whole of 2021 and 2022, and the global credit rating downgrade rate has soared to 54%. At the same time, global business activities came to a standstill in October this year, showing that the road ahead for global enterprises is still clouded.
Global enterprises are facing “dark clouds”
according toS&P GlobalAccording to data collected by a market intelligence company on more than 27,000 companies in 40 countries around the world, business activities of global companies came to a standstill in October this year. Global business activity has been weak in recent months, which may mean a “dark cloud” is forming over the outlook for businesses.
This is partly because the fiscal stimulus of the pandemic is beginning to fade and the post-pandemic boom is beginning to cool. At the same time, although inflation has eased in much of the world, overall inflationary pressures remain high.
“Taking these factors together, global businesses face margins, demand andcreditThe decline in quality is not surprising,”S&P Globalwrote in the report.
Data Display,In October this year, global business activities fell sharply, and the global comprehensivepurchasing managers index(PMI) fell to 50, its lowest level in about eight months.The global manufacturing PMI also fell for a fifth consecutive month, while consumer demand in areas such as resources and technology continued to decline, dealing a major blow to corporate profits.
Another analysis report by S&P Global Ratings showed that profit growth of global companies slowed to a near standstill in the third quarter, with earnings before interest, taxes, depreciation and amortization (Ebitda) falling 4.4% year-on-year. If oil is excluded,natural gasResource companies such as , metals and mining industries, global corporate revenue is still growing, but at a slower rate.
Furthermore, profit margins are declining in two-thirds of global industries, with many companies reducingstock buybackand cutting annual dividend increases to combat the situation.
Regionally, Europe remains a typical example of the deterioration of the global economic environment. In North America, Canada has also entered a recession, while the US economy, although surprisingly continuing to grow in 2023, is losing momentum. On the bright side, however, global employment continues to grow, albeit at a slower pace than in January.
Global credit rating downgrade ratio rises
Against the background of weakening corporate profit growth momentum and rising borrowing costs, corporate credit prospects have deteriorated.S&P Global data shows that in the third quarter, the rate of global credit rating downgrades rose to 54% from 52% in the second quarter.
At the beginning of 2023, S&P’s rating downgrades were mainly concentrated in the United States and the Asia-Pacific region, but recently, the proportion of rating downgrades has increased in regions such as Europe and emerging markets.
S&P Global said that as often happens in slowing economic conditions, lower-rated issuers face more pressing challenges.Among them, metals, mining andsteel industryand the healthcare sector may be most affected by tighter credit conditions.
Over the past year, amid tightening financial conditions andinterest rateAgainst the background of rising prices, American companies are struggling.
S&P Global data shows that since the beginning of 2023, the number of global corporate bankruptcies has exceeded the levels of 2021 and 2022.And based onMoody’sAccording to data, so far this year, U.S. corporate debt defaults have exceeded last year’s total.
Wall Street strategists also issued stark warnings about the situation for businesses as earnings slow and borrowing costs rise.Charles Schwabfinancial managementThe total number of U.S. corporate debt defaults and bankruptcies may continue to surge until peaking sometime in the first quarter of next year.
(Source of article: Financial Associated Press)
Source of article: Financial Associated Press
Original title: Dark clouds are looming over the global economy!S&P warns: The number of bankruptcies this year has exceeded two years
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