African stock markets plummet at the end of the first quarter of 2019. All studies show, the rise in interest rates of the Fed pushing large investors to fall back on mature markets at the expense of emerging markets and frontier markets. In this small atmosphere of end of the period of fat cows that blows, it must be said, for three years, well before the slogan “America First”, which constitutes the alpha and the omega of the Trump administration, it does not We must not limit the analysis to local contingencies.
There is something more, in addition to the IMF’s rhetoric against the States invited to defattage the mammoth, regulatory blockages, institutional immobility and the reluctance of households that explains the ongoing erosion of securities from Casablanca to Abidjan. Precisely, by bringing the analysis to the global level, one can not not linger over the last rating of the rating agency Standard and Poor’s published on March 12, 2019.
According to S & P, total global debt has jumped by about 50% since the last global financial crisis, and the global debt-to-GDP ratio exceeds 230%, up from 208% in 2008.
But, tempers the agency, if the global debt is higher and riskier than ten years ago, the risk of contagion is lower. Indeed, the increase in debt is largely due to the sovereign bonds of developed economies and those of Chinese companies that finance themselves in their domestic market.
The risks are still high. For 10 years, investors have turned to products whose markets are potentially less liquid and more volatile.
Of the nearly 12,000 companies screened by S & P, 61% believe we have an ‘aggressive’ or ‘heavily indebted’ financial risk profile (rake 58% 10 years ago). “This slight increase is partly attributable to Chinese companies, which now account for about 2 / 5th of the debt that we qualify as “, says the agency.
At the global level, credit risk has generally deteriorated over the past decade (downgrades and new ratings in the “speculative” category). Even in the investment category, ratings are much more concentrated in the “BBB” category than 10 years ago.
Similarly, 80% of outstanding leveraged loans have light covenant versus 15% 10 years ago.
Rather weak in recent years, the risk of default may start to rise again as a result of higher financing costs and a slowdown in the global economy. “Our economists now estimate 20-25% risk of a U.S. recession, against 15-20% last year,” said S & P, detailing its outlook for the figures below.
Some numbers :
– States – The advanced economies increased their indebtedness by $ 19.1 trillion (USA: + $ 10.6 trillion, China: ¨ + $ 5 trillion, Euro zone: + $ 2.8 trillion).
– Households – Debt Ratio / Global GDP: 59% (vs. 65% in 2008). Compared to 2008 and relative to GDP, household debt has fallen in the US and the Euro Zone, and increased in China.
– Financial sector – Overall decrease in leverage: large cuts in the US; marginal increase in the Euro zone; net increase in China, but from a lower base.
– Businesses – Debt increased mainly in emerging countries – China: +2/3, to 155% of GDP; USA / Euro zone: stable debt in absolute terms.
Clearly, the next global crisis, certain according to analysts, will not be of the same magnitude as that of 2008. The risk of contagion seems low but (what does not say S & P yet) we think that the occurrence of the crisis will be accompanied by continued stress in the ecosystem of large investors prone to strategic retreat. The volatile share of small foreign funds in the animation of African stock markets may play the role of communicating sluice and transmit to Africa its share of the crisis.
