Global Debt Review 2020
Paul Jackson. Global Head of Asset Allocation Research, and András Vig. Multi Asset Strategist
Debt remains largely a developed world phenomenon, with the private sectors of countries such as Belgium, France, the Netherlands and Switzerland carrying a lot of debt (as well as China). Public sector debt problems are well known in countries such as Japan and Italy but government debt has been on the rise in many countries in recent years, especially the US.
Luckily, interest rates and bond yields are at multi-century lows in many countries, which helps to depress debt service ratios. Despite this, some countries are experiencing an upward trend in the private sector debt service burden, notably Canada, China, France and Switzerland.
We suspect that elevated debt will not be a problem as long as debt service ratios remain under control. Economic recession and/or a sharp rise in financing costs could raise debt ratios and debt service costs. We are about to discover if recession alone is enough to make debt a problem. Let's hope central banks can keep a lid on financing costs.
Investment risks
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The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.
Important information
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Data as at 26.06.2020, unless otherwise stated. This document is marketing material and is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell securities.
Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals, they are subject to change without notice and are not to be construed as investment advice.
