The NIghtmare Waiting In the Wings

I know it’s not the sort of thing that people talk about when they are focused on what band-aid-cum-can-kicking “solution” authorities are going to come up with in the next 24 hours, but even if by some miracle they sort out the current round of problems, just look at what’s waiting for us in the wings:

“Treasurers Face $46 Trillion Financing Cliff” (CFO.com)

A massive amount of global corporate debt matures in the next four years, and it’s causing treasurers to refocus their efforts on securing access to credit.

A measure of the scale of the refinancing problem is revealed in a recent report by Standard & Poor’s Ratings Services. S&P suggests there is as much as a $46 trillion “credit overhang” — the amount of money corporates will need to raise between 2012 and 2016 to refinance their soon-to-mature debts and to fund capital expenditure and working capital growth.

The combination of bank balance-sheet restructuring, a euro zone crisis, a softening U.S. recovery, and the prospect of slower growth in China could make for what S&P calls “a perfect storm” in credit markets. S&P’s working assumption is that “global banks and debt capital markets will largely be able to continue to provide the majority of liquidity to allow most corporate issuers to proactively manage their forthcoming refinancings.” However, S&P warns, “the balance is fragile” and there is the threat of financing disruptions “even for borrowers that are not highly leveraged.”

New money requirements from 2012 to 2016 could be as much as $2.3 trillion in the euro area and the United Kingdom, $3 trillion in the United States, almost $10 trillion in China, and $1 trillion in Japan. (Those numbers assume corporate debt grows at 1.2 times the rate of GDP over the next five years.)

Added to this are estimated refinancing needs of $8.6 trillion in the euro area and the United Kingdom, $8.6 trillion in the United States, $7 trillion in China, and $5.8 trillion in Japan.

But then again, it’s only money, right? If we need more, we can just print it.