Chart - As interest rates rise, corporate debt maturities will pose a challenge for US borrowers

Patturaja Murugaboopathy

Reuters, September 25 - Starting from 2027, a rising wall of maturing U.S. corporate debt will put pressure on companies, forcing them to refinance funds borrowed at ultra-low rates during the pandemic.

According to an analysis by Reuters of London Stock Exchange Group (LSEG) data, around $4.3 trillion in non-financial U.S. corporate bonds will mature between 2027 and 2031. As many companies pushed their debt maturities into later years through refinancing, the annual maturity volume will rise from about $572 billion in 2027 to approximately $1.03 trillion in 2030.

Data from the Institute of International Finance shows that global debt has climbed to a record high of over $365 trillion. At the same time, rising U.S. Treasury yields have increased refinancing costs across markets, posing challenges for companies. The benchmark 10-year U.S. Treasury yield has surpassed 5%, near its highest level since 2007.

As debt matures, companies that secured low-cost fixed-rate financing in the early part of this decade will increasingly face higher refinancing costs, which will put pressure on their profits and cash flow.

This burden will be heaviest for lower-rated borrowers. According to LSEG data, the maturity volume for high-yield bonds will surge from about $68.5 billion in 2027 to $314.1 billion in 2029, while investment-grade bond maturities will rise from $437 billion to $512.6 billion.

High-yield bonds will account for about one-third of all bonds maturing in 2029, compared with only 12% in 2027.

Bond fund manager PIMCO said that most investment-grade and high-yield bond issuers should be able to handle higher refinancing costs, but the most vulnerable borrowers will face even greater pressure. The company noted that if refinancing is done at current index yields, the coupon rates of CCC-rated bonds maturing in 2027 and 2028 could roughly double.

This refinancing wave will coincide with large-scale borrowing by major technology companies to finance artificial intelligence infrastructure. According to Goldman Sachs, the total bond issuance by ultra-large tech companies—including Amazon, Alphabet, Meta, Microsoft, and Oracle—will reach $420 billion in 2027, representing a 60% increase over the projected level in 2026.

(To facilitate non-native English speakers, Reuters automatically translates its reports into several other languages. As automated translation may contain errors or fail to include necessary context, Reuters does not guarantee the accuracy of the automated translation and provides it solely for readers' convenience. Reuters accepts no liability for any damage or loss arising from the use of the automated translation function.)