"Corporate Apocalypse: Predicting a Surge in Failures by 2024"
Originally Published 2 years ago — by Reuters
Debt-laden companies across Europe, Middle East, and Africa are facing a $500 billion refinancing challenge in the first half of 2024, which could lead to the demise of many "zombie" businesses. As interest rates rise and banks tighten risk ahead of stricter capital rules, weaker companies are seeking new loans and debt deals just as government borrowing costs soar globally. Failure to secure affordable cash could result in insolvencies and layoffs. Signs of distress are already evident, with corporate insolvencies in England and Wales up 19% in August. The Bank of England has warned lenders about the risk of corporate loan defaults, and some banks are referring more small businesses to their restructuring teams. The looming refinancing task, coupled with tougher capital rules for banks from 2025, is expected to strain support for struggling companies.