Stacks of U.S. $100 bills in New York, U.S. (Photographer: Scott Eells/Bloomberg)

The World’s Biggest Corporate Borrowers Are Dominated by Tech

(Bloomberg Markets) -- The cheap-money era that followed the 2008 credit crisis has lured many companies into the debt market. Here’s a list of the 10 biggest nonfinancial corporate borrowers, based on Bloomberg data and recent financial reports.

AT&T (Total debt: $177b)
AT&T Inc.’s mega-acquisitions of DirecTV in 2015 and Time Warner in 2018 were largely responsible for making it the world’s biggest nonfinancial corporate borrower. The Dallas-based telecommunications carrier, which made debt reduction its “top priority” this year, plans to pay down about $20 billion with internally generated cash flow and proceeds from asset sales.

SoftBank ($154b)
Masayoshi Son’s SoftBank Group Corp. almost quadrupled its debt, to more than $150 billion, over five years with investments in hot startups such as Uber Technologies Inc. and its purchase of the U.K.’s ARM Holdings. The Tokyo-based telecommunication company-turned-fund manager says investment gains offset the leverage and that near-term liquidity is adequate to handle bond maturities.

Apple ($115b)
Rather than funding acquisitions, Apple Inc. began building its 12-digit debt load in 2013 to finance dividends and stock buybacks. The Cupertino, Calif.-based tech giant also used its multibillion-dollar cash pile overseas to invest in corporate debt. A change in the tax law limited the benefit to keeping money outside the U.S., cutting Apple’s appetite for issuing or buying debt.

Verizon ($113b)
Verizon Communications Inc. completed the largest corporate bond sale in history, $49 billion, to pay for Vodafone Group Plc’s stake in Verizon Wireless in 2013. While competitor AT&T has recently prioritized debt reduction, New York-based Verizon has spent years shoring up its balance sheet through debt buybacks and exchanges. It aims to regain a single-A rating.

Comcast ($112b)
The Philadelphia-based cable company joined the top borrowers because of its $39 billion winning bid for British broadcaster Sky last year. While the price tag drew scorn, credit raters gave Comcast Corp. the benefit of the doubt regarding its ability to deleverage quickly. The company is holding off on buying back stock this year to prioritize debt reduction.

AB InBev ($110b)
The world’s largest brewer of beer has also amassed one of the world’s largest balance sheets, mostly because of its $100 billion acquisition of SABMiller in 2016. Facing pressure from credit raters, Anheuser-Busch InBev NV cut its dividend in half last year and has started to refinance some of the debt it took on for the deal.

General Electric ($110b)
While much of General Electric Co.’s debt is left over from the heyday of GE Capital, Chief Executive Officer Larry Culp aims to reduce the industrial business’s leverage. GE won’t need to issue new debt until 2021, management said this year, comforting bondholders and shareholders alike. It also recently sold its biopharmaceutical business for more than $21 billion to help pay down debt.

China Evergrande ($98b)
The Guangzhou-based property company has accumulated the largest land bank among Chinese developers—and also one of the biggest balance sheets. China Evergrande Group has prioritized debt reduction in recent years, but tighter liquidity and rising funding costs still present challenges to a heavy maturity schedule in 2019.

Shell ($77b)
Royal Dutch Shell Plc, Europe’s largest oil company, took on a mountain of debt when it bought BG Group for more than $50 billion in 2016. Since then the company has divested $30 billion in assets. Shell said in January it has “ample capacity” for additional debt reduction and share buybacks from free cash flow in the next two years.

Microsoft ($73b)
Of the world’s biggest corporate borrowers, Microsoft Corp. is the only one with a pristine AAA rating. In fact, it’s one of only two U.S. companies—the other is Johnson & Johnson—with that status. Microsoft had been a serial issuer of debt, including about $20 billion in 2016 to pay for LinkedIn. The software giant’s appetite for debt, like Apple’s, changed with the U.S. tax law.

To identify the biggest corporate borrowers, use the Equity Screening function {EQS }. Start with securities with an active-trading status and limit the universe to the primary security. Then add Short and Long Term Debt from the latest filing to the search criteria and display a ranking of the top 15, using U.S. dollars as the criteria currency.

In our screen, we excluded all finance sectors except real estate. We also excluded automotive manufacturing within consumer discretionary because of the active financing arms of companies within the sector. We discarded borrowers that are government-owned or -backed, such as Brazil’s Petróleo Brasileiro SA and Italy’s Enel SpA. In some cases we excluded leases and other types of debt that were included in the EQS figure.

*All figures as of the end of December 2018, except China Evergrande, which was as of the end of June 2018
Source: {EQS }

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