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Companies are taking on another $1 trillion in debt

July 13, 2020. Summarized by summa-bot.

A view of the New York Stock Exchange (NYSE) is seen at Wall Street on June 29, 2020 in New York City. - Stock markets on both sides of the Atlantic struggled Monday to rebound from last week's losses as optimism over easing lockdowns was torpedoed by fear over surging coronavirus infections. (Photo by Angela Weiss / AFP) (Photo by ANGELA WEISS/AFP via Getty Images)

Powered by ultra-low interest rates, corporate borrowing was already at an-all time high before the pandemic. Now, as cash-strapped companies frantically try to shore up their balance sheets, debts are expected to get even bigger.

What's happening: Corporate debt is poised to soar to a new record in 2020, Janus Henderson said in a report Monday.

The asset manager, which analyzed 900 companies from around the world, said net borrowing could increase by as much as $1 trillion this year over 2019, when it surged to $8. 3 trillion.

While large multinational companies like FedEx (FDX), Nike (NKE) and UPS (UPS) quickly tapped credit markets in March to fortify their financial position going into the pandemic, credit issuance has shifted to lower-quality borrowers in recent weeks, according to Janus Henderson portfolio manager Seth Meyer.

Citigroup's Hans Lorenzen said in a recent note to clients that he expects to learn that European companies borrowed €450 billion ($510 billion) between March and May, almost three times as much as they borrowed during the same three months in 2019.

Janus Henderson points out that American companies now owe almost half the world's net corporate debts, both because of their global scale and a greater willingness to borrow.

Analyst Heath Terry thinks Netflix will report stronger-than-expected subscriber growth when it posts earnings later this week.

The agency now expects demand to plunge by 7. 9 million barrels per day this year, a slightly smaller decline than forecast in its previous report.

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