Rising Debt Servicing Costs Could Hurt Corporates in Future
Dow Jones
Sep 30
1509 GMT - Soaring government bond yields, which translate to high borrowing costs, could weigh on corporates in the foreseeable future, Societe Generale's Juan Valencia says in a note. For now, debt servicing costs remain manageable because companies still hold bonds issued in the past at lower coupons, he says. The cost of debt is likely to rise further as bonds maturing are replaced by bonds with higher coupons, Valencia says. "The rising sovereign bond yields means that the cost of funding is getting more onerous for companies and banks," he says.
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