In the first half of the year, the total debt of the top 933 largest multinational corporations worldwide, operating in all sectors except finance and real estate, reached an astonishing record level of $8.802 trillion. This represents a 6.2% increase in debt over a 12-month period (at constant exchange rates), according to the annual report published by Janus Henderson on Wednesday.

However, the trend of over-indebtedness is expected to reverse in the near future, according to estimates from the Anglo-American asset management group. This shift is due to the significant rise in borrowing costs. It is well known that excessive debt inevitably increases the risk of insolvency, especially considering the withdrawal of support measures that governments provided to businesses during the global health crisis.

The telecommunications sector appears to be the most heavily indebted, as indicated by the study. The company with the highest debt is Verizon, an American telecommunications firm, owing $172 billion. Additionally, the ranking includes American companies AT&T with $154 billion in debt, German Deutsche Telekom with $153 billion, and American Comcast with $102 billion.

However, the utilities sector is the primary contributor to the debt increase due to "significant capital expenditures and dividends," according to the Janus Henderson report.

On the other hand, the colossal profits accrued by oil companies during the energy crisis have allowed them to reduce their debt to the lowest level in nearly a decade. Janus Henderson anticipates further debt reduction for the entire petroleum sector, as well as for all major global multinational corporations.

"Rising borrowing costs and economic slowdown should prompt companies to seek partial debt repayment," according to experts. However, for now, the interest rate increases by central banks to control inflation appear to have limited impact on borrowing and debts of large multinational conglomerates.

"With borrowing costs around 5.3% at a stable exchange rate, multinational corporations are effectively borrowing in the bond market with fixed interest rates, which protects them until they refinance their debt and facilitates their refinancing," notes Janus Henderson.

Nevertheless, overindebtedness and excessive debt pose existential risks to businesses, specifically the risk of bankruptcy. During the pandemic, government support was crucial for many businesses, regardless of size, as state capital and guarantees helped them survive.

However, as the pandemic crisis recedes, government support measures are being phased out. As a result, the risk of bankruptcy is resurfacing, and several markets have already witnessed an increase in bankruptcies. In France, according to data released by the country's central bank, bankruptcies have recently risen to pre-pandemic levels.

Notably, the largest corporate groups are showing greater financial vulnerability, which consequently increases their risk of insolvency.

According to recent data from the Central Bank of France, bankruptcies of companies from all sectors and of all sizes in the French market increased to 48,673 in the past year, compared to 51,145 in 2019 (the last pre-pandemic year).

For small businesses, defined as those employing fewer than 10 salaried workers, bankruptcies in June 2023 increased by 57% on an annual basis. Small businesses with 10 to 49 employees saw an increase of 62.8%, while medium-sized enterprises employing 50 to 249 workers experienced a 50.4% rise in bankruptcies. The rate of bankruptcy increase for the largest corporate groups skyrocketed to 103.8%.