The concentration of corporate debt: The top 48.
The US Justice Department today approved the merger of T-Mobile, the third largest wireless carrier and Sprint Corp., the fourth largest wireless carrier. For the merger to go forward, they will have to sell Sprint’s prepaid brands to Dish. As for the rest, whatever this does to competition and rates for wireless services, one thing is for sure: It creates another US debt monster.
T-Mobile has $37.4 billion in short-term and long-term debt; Sprint has $39.8 billion. Combined they will have $77.2 billion in debt.
This includes only debt, not other liabilities, such as accounts payable, income tax payable, accrued payroll, or the catch-all “other liabilities.” Short-term debt is due within one year and includes long-term debt that matures within one year; long-term debt is due in over one year. “Capitalized leases” – this is a big item with Amazon – are long-term debt.
After the merger, the combined T-Mobile and Sprint, with $77 billion in debts, would move up to the 9th most indebted company in the US, just ahead of Walmart and behind CVS.
This is just the latest product of the concentration of debt in the US. Telecom mergers & acquisitions have created these behemoths:
- AT&T, Number 1 most indebted company in America, with a fabulous $191 billion in short-term and long-term debt.
- Verizon, Number 3 most indebted company in America, with a still fabulous $136 billion in debt.
- Comcast, Number 4 most indebted company in America, with $113.78 billion in debt.
- And Charter Communications, the Number 10 most indebted outfit in America, with $75.3 billion in debt.
I’m counting only non-financial companies. This excludes financial companies such as banks that borrow money to lend money. But there are some gray areas in this distinction. This gray area includes the Number 2 most indebted US company, Ford with $159.7 billion in debt. Its wholly-owned subsidiary Ford Credit is its financial arm and captive auto lender that borrows money to lend money. So be it. Several companies in this group have financial subsidiaries.
Apple is Number 5 with $112.6 billion in debt, a result of its all-time record-breaking share buybacks with which it blew past GE, another share buyback queen before its house of cards threatened to collapse, with $111.7 billion in Debt.
Those are the six non-financial publicly traded companies, each with more than $100 billion in debt.
In fact, the top 10 most indebted companies combined have a breath-taking $1.2 trillion in debt. These days we throw “trillions” around to stay fit on a daily basis, but it’s still “real money,” so to speak. This is the outgrowth of the massive concentration of debt in the US corporate world.
Corporate debt has ballooned in many countries. In terms of magnitude – in terms of trillions of dollars – and in terms of how fast this debt has ballooned, no country can hold a candle to China’s corporations, though they now have to deleverage, forced or otherwise. On that global scale, and as a percent of GDP, the US corporate debt is only in 24th place (here are the countries with the most corporate debt).
An interesting thing happened on Amazon’s balance sheet: Its long-term debt, which includes capital leases, jumped by 77% in six months, from $33.1 billion at the end of 2018 to $58.5 billion at the end of June. This moved Amazon up to the Number 12 most indebted company in America.
So I did some manual digging, and below are the 48 most indebted, publicly traded non-financial companies in the US. Each has at least $20 billion in short-term and long-term debt. Combined, they have $2.6 trillion in debt. This list is not a measure of “credit risk” — there are various ratios and credit ratings that track credit risk — but it is a measure of the concentration of debt in Corporate America.
To get a feel for how much $2.6 trillion in debt is: This is equal to the total debt of the government of France and more than the debt of Germany’s government.
The data is based on recent quarterly reports. Let me know if I left out some of your favorites (the minimum qualifier is $20 billion), and I will update the table. “ST Debt” denotes “short-term debt” and “LT Debt” denoted “Long-term Debt.” If your smartphone clips the table on the right and the “Total” column is missing, hold your device in landscape position. You can search the table via the search function in your browser. All amounts in billion dollars.
|Company||Symbol||ST Debt||LT Debt||Total|
|26||NextEra Energy Inc.||[NEE]||10.3||29.9||40.2|
|40||Procter & Gamble||[PG]||8.9||21.4||30.3|
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