EMEA spec-grade refinancing needs to peak at $101 bln

Fallen angels and first-time bond issuers have pushed up the refinancing needs of EMEA speculative-grade (spec-grade) companies to a record $101 bln next year, despite substantial bond issuance in the last 12 months, Moody's Investors Service said in its latest study.
"Although we have seen significant EMEA spec-grade bond issuance, around $97 bln, over the last 12 months, spec-grade companies still have $101 bln refinancing needs in 2014, reflecting the higher number of fallen angels and first-time issuers," says Douglas Crawford, a Moody's senior analyst and author of the study.
In the US, however, where spec-grade debt maturing in 2014 fell to $79 bln from $168 bln, spec-grade issuance is likely to significantly cover next year's debt maturities.
Total debt outstanding of the 327 companies has increased by 19% in the past year, to $787 bln of bank and bond debt maturing from 2014 onwards. Approximately 57% of this debt matures through 2017, compared with 55% to 2016 in Moody's previous study.
Fallen angels have the greatest near-term refinancing needs. The nine additions to Moody's universe include formerly investment-grade rated companies from the metals & mining, telecommunications and utilities industries. ArcelorMittal (Ba1 negative) alone accounts for around half of the $12 bln in debt maturing from new fallen angels in the next two years.
Rated leveraged buyouts (LBOs) have continued to reduce their near-term maturities, although refinancing needs for the lowest rated companies have doubled. LBOs rated in the Caa category now have $4.4 bln in near-term maturities compared with $2.6 bln in last year's study.
Within the euro area periphery, 61% of debt now matures in the next four years, compared with 54% in last year's study, and Portuguese companies have the greatest near-term refinancing needs, at $18 bln over the next two years.