One of the consequences of sustained growth in interest rates has been an increase in financial vulnerability among corporations.
“While in 2019-2020 companies could borrow in the Eurozone at 1.5-2% and in the U.S. at 2-3% per annum, by 2024 refinancing was already occurring at rates of 5-6% in both economies,” experts note.
The number of "zombie companies," which continue to operate but are unable to service their debts without external support, has also increased,” analysts emphasize.
Forecasts indicate that a prolonged period of high rates will exacerbate the risks of financial instability. A large-scale debt restructuring is expected to become inevitable: peaks in corporate obligation refinancing in 2027-2028 will follow sovereign obligations expected in 2025-2026.
“Given the rise in the number of 'zombie companies' and the need for budget consolidation in many countries, this limits investment opportunities and increases the risk of slowing global economic growth,” the authors of the study conclude.
