US junk bond issuers are poised to unleash another wave of refinancing after back-to-back years of low volume, as the share of debt with near-term maturities climbs to the highest level in more than a decade.
The amount of outstanding junk bonds set to mature in 18 to 36 months has soared to levels last seen in 2007, Goldman Sachs Group strategists including Lotfi Karoui wrote in a note.
The figure stands at 19 per cent of the total high-yield market as of the quarter ending September 30, compared to 13 per cent during the year-ago quarter and 9 per cent over the same quarter in 2021.
The growing near-term maturity wall as well as deteriorating balance sheet liquidity are likely to push corporations to issue new debt, even as borrowing costs remain high, according to the strategists.
The spread on Bloomberg’s US Corporate High Yield Bond Index stood at 423 basis points on Thursday, nearly 60 basis points wider than the lowest level this year of 366 basis points in early September.
“It’s kind of like an arm wrestling match,” said Bob Kricheff, portfolio manager at Shenkman Capital Management.
“They’re trying to time the market – which we all know is difficult – on rates, versus being prudent and saying, ‘I don’t want this to become a current debt. I want to retire it a year before it matures. Let me bite the bullet and take it out now’.
“That’s why you’re seeing people attacking 2024, 2025 and even 2026 maturities with some of these issues.”
Issuance has slowed over the last few years as the era of low-cost borrowing came to an end.
“So, the first wave of that increase in the share of bonds maturing over the next 36 months really reflects that big decline,” Mr Karoui said.
Goldman Sachs expects to finish 2023 with $170 billion of gross high-yield supply, compared to the $131 billion notched so far this year and up significantly versus 2022 and 2023.
That tally is forecast to rise to $225 billion in 2024, which “reflects our expectations of higher refinancing activity”, wrote the strategists.
Goldman also forecasts US high-yield net supply will flip back into positive territory in 2024 to about $65 billion, from around negative $40 billion so far this year.
Heightened funding costs after the Federal Reserve’s interest rate-rise spree may give some riskier borrowers pause for thought.
“I think the all-in yields should be attractive to investors, but the ramping up in capital costs due to the higher rate environment is going to be a challenge for a lot of these issuers,” said Scott Kimball, managing director at Loop Capital Asset Management.
As a result, he said borrowers are likely to wait out the higher-for-longer rates backdrop for as long as they can, although he thinks it unlikely that rates will fall any time soon.
Analysts and investors are also wary of defaults. Moody’s Investors Service sees the US speculative-grade default rate peaking at 5.6 per cent in January 2024 before easing to 4.6 per cent by August.
An upside is that the 2024 maturity mix is heavily skewed towards BB rated issuers, which make up close to 70 per cent, a CreditSights report released mid-year shows.
In Europe, high-yield gross supply is €45 billion ($47.6 billion) so far this year and expected to reach €65 billion in the coming year, also largely due to the growing near-term maturity wall, according to Goldman Sachs.
Net issuance is expected to flip to about flat in 2024 after two years of negative net supply.
Ultimately, it comes down to whether issuers are willing to accept a much higher funding cost relative to two or three years ago, which in turn could have consequences on their debt servicing capacity and interest expenses, among other things, according to Mr Karoui.
For the bulk of the high-yield market, however, this shouldn’t be an issue, he said.
“You’ll have to pay more, but I don’t think it’ll be problematic in terms of lack of investor demand.”
UAE currency: the story behind the money in your pockets
UAE currency: the story behind the money in your pockets
Frankenstein in Baghdad
Ahmed Saadawi
Penguin Press
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UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Timeline
2012-2015
The company offers payments/bribes to win key contracts in the Middle East
May 2017
The UK SFO officially opens investigation into Petrofac’s use of agents, corruption, and potential bribery to secure contracts
September 2021
Petrofac pleads guilty to seven counts of failing to prevent bribery under the UK Bribery Act
October 2021
Court fines Petrofac £77 million for bribery. Former executive receives a two-year suspended sentence
December 2024
Petrofac enters into comprehensive restructuring to strengthen the financial position of the group
May 2025
The High Court of England and Wales approves the company’s restructuring plan
July 2025
The Court of Appeal issues a judgment challenging parts of the restructuring plan
August 2025
Petrofac issues a business update to execute the restructuring and confirms it will appeal the Court of Appeal decision
October 2025
Petrofac loses a major TenneT offshore wind contract worth €13 billion. Holding company files for administration in the UK. Petrofac delisted from the London Stock Exchange
November 2025
180 Petrofac employees laid off in the UAE
Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
Hotel Silence
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UAE beat Namibia by eight wickets
Fixtures
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The Voice of Hind Rajab
Starring: Saja Kilani, Clara Khoury, Motaz Malhees
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What vitamins do we know are beneficial for living in the UAE
Vitamin D: Highly relevant in the UAE due to limited sun exposure; supports bone health, immunity and mood.
Vitamin B12: Important for nerve health and energy production, especially for vegetarians, vegans and individuals with absorption issues.
Iron: Useful only when deficiency or anaemia is confirmed; helps reduce fatigue and support immunity.
Omega-3 (EPA/DHA): Supports heart health and reduces inflammation, especially for those who consume little fish.
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
The specs
Engine: 8.0-litre, quad-turbo 16-cylinder
Transmission: 7-speed auto
0-100kmh 2.3 seconds
0-200kmh 5.5 seconds
0-300kmh 11.6 seconds
Power: 1500hp
Torque: 1600Nm
Price: Dh13,400,000
On sale: now
'Laal Kaptaan'
Director: Navdeep Singh
Stars: Saif Ali Khan, Manav Vij, Deepak Dobriyal, Zoya Hussain
Rating: 2/5
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Engine: 2.0-litre four-cylinder turbo
Power: 178hp at 5,500rpm
Torque: 280Nm at 1,350-4,200rpm
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Boulder shooting victims
• Denny Strong, 20
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• Lynn Murray, 62
• Jody Waters, 65
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VEZEETA PROFILE
Date started: 2012
Founder: Amir Barsoum
Based: Dubai, UAE
Sector: HealthTech / MedTech
Size: 300 employees
Funding: $22.6 million (as of September 2018)
Investors: Technology Development Fund, Silicon Badia, Beco Capital, Vostok New Ventures, Endeavour Catalyst, Crescent Enterprises’ CE-Ventures, Saudi Technology Ventures and IFC
Dhadak 2
Director: Shazia Iqbal
Starring: Siddhant Chaturvedi, Triptii Dimri
Rating: 1/5
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Global state-owned investor ranking by size
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China
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UAE
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Norway
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Canada
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Killing of Qassem Suleimani
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1st Test July 26-30 in Galle
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'Munich: The Edge of War'
Director: Christian Schwochow
Starring: George MacKay, Jannis Niewohner, Jeremy Irons
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Key features of new policy
Pupils to learn coding and other vocational skills from Grade 6
Exams to test critical thinking and application of knowledge
A new National Assessment Centre, PARAKH (Performance, Assessment, Review and Analysis for Holistic Development) will form the standard for schools
Schools to implement online system to encouraging transparency and accountability
