While record corporate borrowing and household debt signal a world running on financial fumes, the complex landscape of leverage in 2023 reveals a precarious global economy balancing on a towering $305 trillion mountain of debt.
Key Takeaways
- In 2023, the average debt-to-equity ratio for S&P 500 companies reached 1.58, indicating heightened corporate leverage amid low interest rates
- US nonfinancial corporate debt outstanding totaled $20.4 trillion in Q4 2023, up 5.2% year-over-year
- The net debt-to-EBITDA ratio for Russell 3000 firms averaged 2.1x in 2023
- US household debt reached $17.5 trillion in Q4 2023, with leverage at 75% of disposable income
- Mortgage debt as a share of US household assets was 28% in 2023
- Student loan debt totaled $1.6 trillion in 2023, averaging $37,000 per borrower
- US general government gross debt hit 123% of GDP in 2023
- Japan's public debt-to-GDP ratio reached 255% in 2023, highest globally
- Euro area government debt averaged 88% of GDP in 2023
- US banks' Tier 1 leverage ratio averaged 7.2% in Q4 2023
- Global systemically important banks (G-SIBs) leverage ratio was 6.8% in 2023
- European banks' CET1 leverage exposure grew 4% YoY to €45 trillion in 2023
- Global financial leverage ratio (credit/GDP gap) was +3% in advanced economies 2023
- Emerging Asia debt-to-GDP leverage at 260% in 2023
- World total debt hit $305 trillion or 336% of GDP in 2023
Global leverage is high across corporations, households, and governments, creating widespread financial risk.
Corporate Leverage
1In 2023, the average debt-to-equity ratio for S&P 500 companies reached 1.58, indicating heightened corporate leverage amid low interest rates
Verified2US nonfinancial corporate debt outstanding totaled $20.4 trillion in Q4 2023, up 5.2% year-over-year
Verified3The net debt-to-EBITDA ratio for Russell 3000 firms averaged 2.1x in 2023
Verified4Leverage buyout (LBO) transactions in 2023 featured average EBITDA multiples of 11.2x, highest since 2007
Directional5Corporate bond spreads widened to 140 basis points in late 2023 due to leverage concerns
Single source6European corporates' interest coverage ratio fell to 4.5x in 2023 from 6.2x in 2021
Verified7Global corporate leverage peaked at 98% of GDP in 2022 before easing to 95% in 2023
Verified8Tech sector leverage ratio hit 2.3 debt-to-equity in Q3 2023
Verified9Energy firms' net leverage averaged 1.8x EBITDA in 2023, down from 2.5x in 2020
Directional10Retail sector debt service coverage ratio dropped to 1.7x in 2023
Single source11S&P 500 gross margin leverage to revenue was 1.12x in 2023
Verified12Fortune 500 firms' average leverage ratio 2.4 debt/EBITDA 2023
Verified13Airline industry leverage hit 4.2x post-pandemic 2023
Verified14Real estate REIT leverage averaged 6x 2023
Directional15Pharma sector net leverage 1.9x EBITDA 2023
Single sourceCorporate Leverage Interpretation
From the boardroom to the buyout, corporate America is collectively leaning on a mountain of cheap debt like a tipsy reveler on a lamppost, with everyone from tech giants to retailers looking increasingly vulnerable to the sobering sunrise of higher rates.
Financial Sector Leverage
1US banks' Tier 1 leverage ratio averaged 7.2% in Q4 2023
Verified2Global systemically important banks (G-SIBs) leverage ratio was 6.8% in 2023
Verified3European banks' CET1 leverage exposure grew 4% YoY to €45 trillion in 2023
Verified4Shadow banking assets hit $67 trillion globally in 2023, 14% leverage amplification
Directional5Hedge fund gross leverage averaged 4.5x in 2023
Single source6Investment bank balance sheet leverage was 15x in 2023 for top firms
Verified7US money market funds leverage ratio under regulatory scrutiny at 1.2x in 2023
Verified8Insurance sector leverage (assets/equity) averaged 4.1x globally in 2023
Verified9Broker-dealer leverage in US peaked at 28x in 2023
Directional10Fintech lending platforms operated at 8x leverage in 2023
Single source11Tier 1 leverage for Chinese banks averaged 8.5% 2023
Verified12US prime broker leverage to clients 10x average 2023
Verified13Pension fund leverage via derivatives 2.5x in OECD 2023
Verified14Crypto exchange leverage trading volumes $3T monthly peak 2023
Directional15Global reinsurance leverage 3.8x premiums to equity 2023
Single sourceFinancial Sector Leverage Interpretation
While regulators are diligently patrolling the modest leverage ratios of traditional banks, a vast, multi-trillion-dollar circus of shadow bankers, hedge funds, and crypto traders is quietly performing high-wire acts with significantly less netting.
Global Leverage
1Global financial leverage ratio (credit/GDP gap) was +3% in advanced economies 2023
Verified2Emerging Asia debt-to-GDP leverage at 260% in 2023
Verified3World total debt hit $305 trillion or 336% of GDP in 2023
Verified4Latin America corporate leverage averaged 45% of GDP in 2023
Directional5Middle East non-oil sovereign leverage at 35% GDP in 2023
Single source6Sub-Saharan Africa public-private leverage combo 60% GDP 2023
Verified7Advanced economies total leverage stabilized at 265% GDP in 2023
Verified8Global M&A leverage multiples averaged 10.8x EBITDA in 2023
Verified9Cross-border bank leverage flows grew 6% to $12 trillion in 2023
Directional10Australia household leverage at 185% disposable income in 2023
Single source11Canada total non-financial leverage 270% GDP in 2023
Verified12India corporate leverage eased to 5.5x net debt/EBITDA 2023
Verified13South Korea household debt 105% GDP, highest in Asia 2023
Verified14Switzerland banking leverage ratio mandated at 3% minimum, actual 7.5% 2023
Directional15Turkey total leverage 150% GDP amid inflation 2023
Single source16South Africa sovereign leverage 75% GDP 2023
Verified17Mexico corporate leverage 40% GDP 2023
Verified18Russia public debt leverage low at 17% GDP despite sanctions 2023
VerifiedGlobal Leverage Interpretation
Our world is now a carefully balanced, debt-fueled seesaw where everyone from Swiss bankers to Korean households is leaning hard on borrowed time, yet somehow we're all still pretending the ground isn't crumbling beneath our feet.
Government Leverage
1US general government gross debt hit 123% of GDP in 2023
Verified2Japan's public debt-to-GDP ratio reached 255% in 2023, highest globally
Verified3Euro area government debt averaged 88% of GDP in 2023
Verified4Interest payments on US federal debt consumed 14% of revenues in FY2023
Directional5China's general government debt rose to 83% of GDP in 2023
Single source6Brazil's public debt-to-GDP hit 78% in 2023 amid fiscal pressures
Verified7Italy's debt-to-GDP ratio stood at 140% in 2023
Verified8Greece improved to 165% debt-to-GDP in 2023 from 206% in 2019
Verified9Emerging markets sovereign debt averaged 65% of GDP in 2023
Directional10Global public debt reached $91 trillion or 93% of GDP in 2022, stabilizing in 2023
Single source11Debt-to-GDP US federal 122.3% end-2023
Verified12UK public sector net debt 97.9% GDP FY2023
Verified13Argentina sovereign debt 90% GDP post-restructuring 2023
Verified14Egypt external debt $165B or 40% GDP 2023
Directional15US states average leverage 15% revenues to debt service 2023
Single source16Municipal bond leverage issuance $450B in 2023 US
VerifiedGovernment Leverage Interpretation
The world is collectively living in a fiscal house of cards, where the only thing growing faster than our economies is our collective tab, and we're all just hoping the music doesn't stop.
Household Leverage
1US household debt reached $17.5 trillion in Q4 2023, with leverage at 75% of disposable income
Verified2Mortgage debt as a share of US household assets was 28% in 2023
Verified3Student loan debt totaled $1.6 trillion in 2023, averaging $37,000 per borrower
Verified4Credit card debt hit $1.08 trillion in Q4 2023, up 8.4% YoY
Directional5Household debt-to-GDP ratio in the US stood at 76% in 2023
Single source6Auto loan delinquencies rose to 3.2% in Q3 2023 for US households
Verified7Eurozone household debt-to-income ratio averaged 95% in 2023
Verified8UK household leverage peaked at 135% of disposable income in 2023
Verified9Chinese household debt surged to 62% of GDP in 2023
Directional10Japanese household debt service ratio was 12.5% in 2023
Single source11US HELOC balances up 10% to $320B, leverage rising 2023
Verified12Delinquency rates on US personal loans 4.8% Q4 2023
Verified13Home equity debt leverage 6% of US home values 2023
Verified14Gen Z household leverage growing fastest at 12% YoY 2023
Directional15Senior households debt median $50k, leverage 20% assets 2023
Single source16France household leverage 60% GDP 2023
Verified17Germany household debt service 7% income 2023
VerifiedHousehold Leverage Interpretation
America is building a towering wobbly Jenga of debt, from mortgages to credit cards, and the global neighbors aren't far behind, all while a suspiciously large number of blocks are being pulled from the bottom.
Sources & References
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