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French and US corporate debt risks are rising

Wednesday, June 19, 2019


Advanced world corporate debt risks.


Expansionary fiscal and monetary policies have boosted economic activity in the United States, Japan, Germany, United Kingdom and France since the global financial crisis, and corporate profits have grown faster than real GDP in all five. In Germany, Japan and the United Kingdom, profits have outgrown the outstanding debts held by financial corporations. This is not the case in the United States or France, where corporate debt risks are piling up.


  • If credit conditions deteriorate or there is an economic downturn, France will have the largest number of highly indebted companies at risk.
  • France’s high corporate debt exposure may prompt the authorities to raise further the counter-cyclical capital buffers banks must hold.
  • Surging leveraged loans and share buybacks are fuelling speculative-grade US corporate bond activity, threatening financial stability.
  • Risks are intensified in specific segments, but the subprime crisis shows that even limited specific risks can threaten overall stability.

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