Page 23 - July-August 2018 GSE Report Flip Book

MONETARY POLICY JJUALN. U- ARUYG. 22001188
Exhibit 1
• SinceRthIeSfinIaNnciGal cCrisiOs, mRaPnyOlarRgeAcoTrpoEratDionEs aBroTun:d the world have shifted toward bond financing because commercial bank lending
GLOBAL DEBT GROWTH
PERIL OR PROMISE?
has been subdued. Today, nearly 20 percent of total global corporate
debt is in the form of bonds, nearly double the share in 2007. Annual
nonfinAaftnerctihael2c0o0r8pfionraantceialbcorisnisd, misasnuyaonbcservhearssexinpcecreteadsgelodba2l .d5ebttimlevesls,tforodemcline.
However, while the household sector globally has reduced its debt relative to GDP, total
$800 billion in 2007 to $2 trillion in 2017. The global value of corporate
debt, which includes household, nonfinancial corporate, and government debt, has
bonds outstanding has increased 2.7 times since 2007 to $11.7 trillion,
continued to creep upward. Total debt reached $169 trillion by the middle of 2017, a doubl7in4gpearcsenat isnhcraeraeseofrfoGmDwPhe.re it stood on the eve of the crisis (Exhibit 1).1
Global debt has grown from $97 trillion to $169 trillion since the crisis but has been stable relative to world GDP since 2014.
Total debt outstanding $ trillion, constant H1 2017 exchange rate
Total debt outstanding1
$ trillion, constant H1 2017 exchange rate
64 Households
Nonfinancial corporates
Government
Total debt to GDP1 %
105 97
117 110
139
157 148
Change,
2007–H1 2017
169 Percentage points 166
+11
+29
+31
42
43
39
38
36
33
33
31
32
56
61
65
66
43
52
18
37
41
42
25
56
59
60
40
50
54
21
29
32
36
2000 07 198 207
08 09 10 13 14 213 226 224 227 232
15 16 H12017 234 237 236
1 Includes household, nonfinancial corporate, and government debt; excludes debt of the financial sector. Estimated bottom up using data for 43 countries from Bank for International Settlements (BIS) and data for eight countries from McKinsey’s Country Debt Database.
NOTE: Figures may not sum to 100%, because of rounding.
SOURCE: BIS; McKins•ey CTohunetry lDoenbtgDa-tabwasae;iMtecKdinsdeyeGelopbael Insitnitugte oanfalycsois rporate bond markets and the
diversification of corporate financing is good for the health of global
financial markets. But there are risks. Noninvestment-grade bonds have
almost quadrupled in size over the past decade, reaching $1.7 trillion in
1 This is the latest in MGI’s ongoing series on global debt. See the previous installment, Debt and (not much) advanced countries. Between 2018 and 2022, a record $1.6 trillion to $2.1
deleveraging, McKinsey Global Institute, February 2015. Corporate debt refinancing
Discussion paper mc 0611
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