Trillions of dollars worth of bonds and loans deemed higher-risk by credit firms are set to come due before the end of 2025, creating a “maturity wall” that could potentially inject more panic into markets, according to a report by a team of global credit strategists at Morgan Stanley.
That figure is equivalent to 26% of the value of bonds included in indexes that track investment-grade and high-yield bonds, along with leveraged loans and other credit products. While investment grade corporate borrowers could be insulated from potential difficulties related to refinancing maturing bonds, borrowers who relied on high-yield bonds and leveraged loans, bank loans made to companies that already have heavy debt burdens, could struggle.
Looming “maturity walls” will impact distinct corners of the credit markets differently. For example, refinancing needs are already “front and center” for U.S. commercial real estate, the Morgan Stanley team said. This means imminent default risks for lower-rated borrowers likely has been worked into the price of those bonds.