Seven Canadian companies make FT's list of 'debt monsters' that have bond markets fretting

Compiled by the U.K.-based Financial Times and dubbed the “debt monsters in the downturn,” the report lists just over 200 companies and includes Canadian miners Iamgold Corp., New Gold Inc. and Taseko mines as well as other Canadian firms such as Telesat Corp., Gran Tierra Energy Inc., Ensign Energy Services Inc. and Husky III.By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc.

“Consider this as a tour of businesses that debt markets are fretting over, rather than a collection of condemned companies,” the report said. Broadly speaking, as interest rates have climbed, companies have missed out on growth opportunities, suspended expansion plans, faced supply-chain disruptions and are encountering challenges in refinancing their debt at reasonable rates, said Peter Adu, vice-president and senior credit officer in the corporate finance group at ratings service Moody’s.Article content

“This means it’s going to take a while before higher rates are fully reflected in the debt structure of most issuers,” he said, adding that inflation in itself is a bigger risk at squeezing margins in many sectors, which can have a faster impact on credits than rising rates.Article content In response to the report, Toronto-based New Gold, which traded at 1,066 bps above government bonds according to the list, said that it maintained “a very healthy balance sheet with no debt due until 2027” and that it expects a “meaningful increase in gold production” during that time.Article content

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