Janus Henderson: Company cash flow drops by 3% and hits record debt levels
Global pre-tax profits (excluding financials) soared by 13.6% to a record $3.62trn, though the improvement was heavily concentrated in the oil sector.
The latest annual Janus Henderson Corporate Debt index found the outstanding total of net new debt on a constant-currency basis now stands at a record $7.8trn, exceeding the 2020 peak.
However, one fifth of the net-debt increase reflected large companies such as Alphabet and Meta simply spending large amounts.
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Total global debt, which excludes cash balances, increased by 3% on a constant-currency basis — around half the average pace of the last decade.
The research by Janus Henderson suggested that higher interest rates may have slowed appetite to borrow though they have not yet made a significant impact on the interest costs.
Meanwhile, though cash flow, which takes into account factors such as investment and working capital, fell, companies still paid a record $2.1trn in dividends and share buybacks, up from $1.7trn in 2021/22, bridging the gap with higher borrowing or by running down cash piles.
Global pre-tax profits (excluding financials) soared by 13.6% to a record $3.62trn, though the improvement was heavily concentrated in the oil sector.
The telecoms, media and mining sectors, among others, saw lower profits year-on-year. Higher global profit boosted equity capital, which means taken all together, the global debt/equity level held steady at 49% year-on-year, despite increased borrowing.
Meanwhile, the median, or typical, yield on investment-grade bonds was 4.9% by May, up from 4.1% a year ago and 1.7% in 2021. This presents opportunities for bond investors to lock into higher income and
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