LONDON (Reuters) - Debt-laden companies across Europe, Middle East and Africa face a $500 billion refinancing scramble in the first half of 2024, a challenge that could kill off many "zombie" businesses even though an expected peak in rates could bring some relief.
Businesses facing rising debt costs after years of low rates will have to compete to secure enough cash in the biggest corporate refinancing rush seen for years, just as banks rein in risk ahead of stricter capital rules.
Analysis by restructuring consultancy Alvarez & Marsal (A&M), shared with Reuters, shows the value of company loans and bonds maturing in the six-month period is higher than any other equivalent period between now and the end of 2025.
A crunch is looming, finance industry experts said, with many weaker, smaller businesses seeking new private loans and public debt deals just as government borrowing costs - which influence loan rates - are soaring globally.
Failure to secure the cash they need at rates they can afford, could lead to insolvencies and layoffs.
"I think we're now starting to finally see the fall of some of the zombies," she added.
The term "zombie" is broadly used in a business context to refer to companies relying on support from governments, lenders and investors to stay afloat.
Signs of distress are already showing. The latest official data from Britain's Office of National Statistics put corporate insolvencies in England and Wales at 2,308 in August, up 19% on the previous year.
Begbies Traynor's quarterly Red Flag Report on corporate distress, covering the April-June period, found that 438,702 businesses across the UK were in "significant" distress, up 8.5% on a year earlier.
