China is forecast to surpass the U.S. as the world's largest corporate debt market for non-financial companies in the next two years, according to a report from Standard & Poor's.
The rating agency expects the debt needs of companies in China to reach upwards of $18 trillion by the end of 2017, accounting for a third of the forecast $53 trillion in new debt and refinancing needs of global companies in the next five years. Debt includes bank loans and bonds and is drawn from public information collated by S&P.
"China is poised to overtake the U.S., and then the U.S. and euro zone combined," said Jayan Dhru, senior managing director at S&P.
Based on a stronger rate of economic growth that propels debt issuance, China's non-financial corporations could owe $13.8 trillion by the end of 2014, eclipsing U.S. corporations' outstanding debt of $13.7 trillion. A slower expansion of debt based on the growth of the economy would see China pass the U.S. in 2015, said S&P.
Globally, companies are seen refinancing $35 trillion of existing debt that consists of bonds and bank loans, with a further $15 trillion to $19 trillion in new money being raised by the end of 2017.
The vast majority of debt from Chinese companies at the moment is in the form of bank loans, but such vast future funding needs are expected to boost its corporate bond market.