Global corporate debt falls 1.9% to $8.15 trillion in 2021

Higher borrowing costs are reducing the appetite for new financing, as corporations take a more conservative stance.

According to a report released Wednesday, net debt for global companies has fallen by 1.9% to $8.15 trillion in the past year.

The study of 900 top firms showed indebtedness is projected to decline by $270 billion in the coming year due to higher interest rates and an anticipated economic slowdown, according to the corporate debt index by investment firm Janus Henderson.

Seth Meyer, fixed income portfolio manager at Janus Henderson said that the economic growth may slow or go into reverse, but companies are starting from a very profitable position.

The study found that the US companies' net debt increased by 0.5% in the past year while the trend was to trim borrowings.

The global economy has seen central banks inject trillions of dollars into to stem the effects of the COVID 19 pandemic.

As economies rebound and inflation soars, those measures are beginning to be reversed.

The study found that the decline in global corporate debt, the first since 2014, was influenced by the energy sector, as high prices led oil and gas firms to cut their borrowings by $155 billion on a constant-currency basis.