Low-rated U.S. companies may struggle to refinance more than $1.7 trillion in debt that comes due between 2011 and 2014 as growing economic concerns make banks and investors more reticent to lend, Standard & Poor's said on Wednesday.
The amount of risky bonds and loans that mature each year will steadily climb to a peak of $550 billion in 2014, S&P said in a report.
We believe that many borrowers at the low end of the ratings scale will encounter serious hurdles to their refinancing needs in 2013 and 2014, said S&P Managing Director John Bilardello.
Lower-rated companies took advantage of good credit markets last year and at the beginning of this year to refinance debt, S&P said.
However, in our view, very low market demand for collateralized debt, combined with U.S. banks' own refinancing needs, makes it apparent why the credit markets have once again tightened after a significant bounce back in the early part of 2010, the rating agency said.
Refinancing risk in coming years will be most prevalent for companies hit hardest by the recent recession, including consumer-dependent firms, S&P said.
This includes restaurants and retailers, who have $8.9 billion in debt due in 2011, another $12 billion 2010 and almost $17 billion maturing in 2013. Media, entertainment and leisure companies have $17.7 billion in debt due next year, another $36.5 billion due in 2012 and $50.6 billion maturing in 2013, S&P said.
(Reporting by Karen Brettell; Editing by Dan Grebler)