In this article, we will list the 25 most indebted companies in the world in 2024. If you want to skip our discussion about interest rates and corporate debt, go to the 9 Most Indebted Companies in the World in 2024.
Interest rates are expected to go down this year, but the Federal Reserve recently indicated that it will be a while before that happens. The Fed President, Raphael Bostic recently highlighted that the risk of inflation may get stuck above the central bank’s 2.1% target. He said that it will likely be appropriate for the Fed to approve two quarter-point rate cuts by the end of this year. Currently, interest rates in the United States are at a twenty-year high of 5.25%-5.50%.
The interest rates were increased as a response to rising prices post-Covid. By doing this, the Fed controls the money supply in the economy, thereby gaining some control over inflation. However, the high interest rates are bad news for corporate America.
Many fast-growing companies prefer to use debt to support their higher growth rather than equity. Debt is arguably less expensive for these companies as the rate of growth of business equity value is often greater than the borrowing cost of debt. However, as the interest rates get higher, the gap between the borrowing cost and the rate of growth of equity becomes narrower. Many fast-growing companies also prefer debt because loans do not provide an ownership stake. It also prevents the dilution of the owner’s equity position in the business.
Fast-growing companies, however, are not the only businesses that use debt. Many businesses use debt for their leverage. Debt provides a way to consistently build equity value for the shareholders. In addition, interest payments on loans are treated as expenses and deducted from revenue, thereby resulting in lower taxes.
Despite all the benefits of debt, the most indebted companies in the world are financial institutions. We saw a similar trend in our companies with the most cash reserves article, where an overwhelming majority were financial institutions. These institutions, particularly banks, rely on borrowing money as their business model. The bank’s spread (the difference between the rate at which it borrows and lends) is an essential tool for its profitability.
Despite the high-interest rates, there is still significant borrowing in the US. There seems to be an endless demand for top-rated corporate debt in the country, which has created an unease among some investors. There is also a concern that liquidity conditions could worsen this year, as so far this year, investment-grade US companies have raised a record amount of debt.
According to S&P Global, Inc. (NYSE:SPGI) corporate debt defaults increased by 80% in 2023. There is a strong likelihood that defaults will remain high this year too. As per S&P Global, Inc. (NYSE:SPGI) the number of companies that failed to make required payments on their debt totaled 153 for 2023, up from 85 in 2022. In 2024, S&P Global, Inc. (NYSE:SPGI) expects further debt deterioration globally, predominantly at the lower end of the ranking scale.
With that backdrop, let’s look at the 25 most indebted companies in the world in 2024.
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Methodology
To curate our list of the most indebted companies in the world in 2024, we looked at the latest debt figures on the balance sheet of companies. We used trusted sources for our research. Companies are ranked according to their debt, the higher their debt, the higher they rank on our list.
By the way, Insider Monkey is an investing website that tracks the movements of corporate insiders and hedge funds. By using a similar consensus approach we identify the best stock picks of more than 900 hedge funds investing in US stocks. The top 10 consensus stock picks of hedge funds outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). Whether you are a beginner investor or a professional looking for the best stocks to buy you can benefit from the wisdom of hedge funds and corporate insiders.
25 – Brookfield Corporation (NYSE:BN)
Total Debt – $226.56 B
Brookfield Corporation (NYSE:BN) is one of the 25 most indebted companies in the world. It is a Canadian multinational company renowned for being the world’s largest alternative investment management firm with assets exceeding $725 billion. Brookfield Corporation (NYSE:BN) has high debt levels due to its involvement in various sectors, including real estate.
24 – Scotiabank
Total Debt – $226.93 B
Scotiabank is another Canadian multinational company that has landed on our list of the most indebted companies in the world. It is a bank that has recently faced issues because of high exposure to bad loans. In November 2023, Scotiabank reported a profit decline and set aside almost $1.3 billion to cover bad loans.
23 – Sumitomo Mitsui Financial Group
Total Debt – $233.95 B
Sumitomo Mitsui Financial Group is a Japanese financial institution that operates globally and offers a wide range of financial products and services. However, its core activities span retail banking, corporate banking, and investment banking segments, catering to diverse client needs across different sectors and regions.
22 – HSBC Holdings Plc (NYSE:HSBC)
Total Debt – $235.15 B
HSBC Holdings Plc (NYSE:HSBC) is 22nd on our list of the 25 most indebted companies in the world. It is headquartered in London, and is a major global banking and financial services organization. HSBC Holdings Plc (NYSE:HSBC)’s status as one of the most indebted companies globally can be attributed to strategic decisions aimed at optimizing its business portfolio and the inherent financial risks associated with its global operations.
21 – Toyota Motor Corporation (NYSE:TM)
Total Debt – $240.93 B
Toyota Motor Corporation (NYSE:TM) is one of the leading automotive manufacturers in Japan. The company recently came into the limelight for having significantly higher debt than other companies in the automotive sector. For perspective, Toyota Motor Corporation (NYSE:TM) is the only non-FI or Investment management company on our list.
20 – CITIC Limited
Total Debt – $249.25 B
CITIC Limited is 20th on our list of the 25 most indebted companies in the world in 2024. It is a prominent Chinese conglomerate that has high debt levels because it diversifies its funding sources through different financing vehicles to secure low-cost funding for the medium and long term while minimizing refinancing risks.
19 – ICBC Limited
Total Debt – $250.78 B
Industrial and Commercial Bank of China (ICBC) is a Chinese state-owned bank that operates globally and offers a wide range of banking products and services. The bank has a robust financial foundation with capital provided by the Ministry of Finance of China.
18 – Bank of China
Total Debt – $268.18 B
Bank of China is another Chinese state-owned bank in our list of the most indebted companies in the world. One of the key factors contributing to the Bank of China’s high debt levels is its extensive operations and financial activities both domestically and internationally.
17 – Morgan Stanley (NYSE:MS)
Total Debt – $276.38 B
Morgan Stanley (NYSE:MS) is one of the most indebted companies in the world. It is a global financial services firm that has recently been associated with significant debt levels. Morgan Stanley (NYSE:MS) faced challenges related to a potential $500 million loss on Twitter debt, highlighting the risks and financial pressures that the company may encounter in its operations.
16 – Crédit Agricole
Total Debt – $286.52 B
Crédit Agricole is 16th on our list of the most indebted companies in the world in 2024. It is a French international banking group and one of the world’s largest cooperative financial institutions.
15 – Toronto Dominion Bank
Total Debt – $290.56 B
Toronto Dominion Bank is a major Canadian financial institution with one of the highest debt levels in the world. However, Fitch Ratings affirmed Toronto Dominion Bank at ‘AA-‘, with a stable outlook, indicating confidence in the bank’s financial stability and creditworthiness.
14 – China Construction Bank
Total Debt – $297.54 B
China Construction Bank is one of the most indebted companies in the world. It is also, however, one of the largest banks in China and globally. Its high levels of debt can be attributed to its role in supporting China’s economic development through financing infrastructure projects and various industries.
13 – Goldman Sachs Group, Inc. (NYSE:GS)
Total Debt – $310.98 B
Goldman Sachs Group, Inc. (NYSE:GS) is 13th on our list of the 25 most indebted companies in the world in 2024. It is a prominent global investment bank and financial services company. Fitch Ratings affirmed Goldman Sachs Group, Inc. (NYSE:GS)’s rating at ‘A’/’F1’ with a stable outlook, indicating confidence in the company’s financial stability despite reporting an elevated level of common equity double leverage.
12 – Royal Bank Of Canada (NYSE:RY)
Total Debt – $317.66 B
Royal Bank of Canada ((NYSE:RY) is 12th on our list of the most indebted companies in the world in 2024. It is a Canadian multinational financial services company and the largest bank in Canada by market capitalization.
11 – Citigroup, Inc. (NYSE:C)
Total Debt – $318.92 B
Citigroup, Inc. (NYSE:C) is a global financial services company with a rich history dating back to its establishment as Citibank in 1812. In the 2000s, the company faced legal challenges and settlements related to various issues, such as misrepresenting Enron-related exposure, legal liability arising from structured finance deals, and misleading investors with false information. These settlements could have raised Citigroup, Inc. (NYSE:C)’s overall debt levels.
10 – Bank of America Corporation (NYSE:BAC)
Total Debt – $334.30 B
Bank of America Corporation (NYSE:BAC) is 10th on our list of the most indebted companies in the world in 2024. It is a leading American multinational investment bank and financial services company. The Bank of America Corporation (NYSE:BAC) offers a wide range of financial products and services, including consumer banking, wealth management, global banking, and markets, as well as debt and equity underwriting services.
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Disclosure: none. 25 Most Indebted Companies in the World in 2024 is originally published on Insider Monkey
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