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Nonfinancial in sentence

30 examples of Nonfinancial in a sentence

The International Monetary Fund, which tends to adopt a conservative posture on such matters (not least to avoid antagonizing powerful governments), estimates that 15% of Chinese loans to nonfinancial corporations are at risk.
With nonfinancial corporations’ debt currently standing at 150% of GDP, the book value of the bad loans could be a quarter of national income.
Before Ben Bernanke became Chairman of the Federal Reserve Board, he was rightly renowned for his academic work on the Great Depression, which showed how, under the right (or wrong) conditions, the financial sector could act as a form of accelerant for developments in the real (nonfinancial) economy.
Nonfinancial corporate debt has fallen only slightly.
In the nonfinancial sector, failing companies often wait too long before declaring bankruptcy, so creditors may step in to do some pushing, potentially even forcing a bankruptcy of a failed firm.
When courts preside over nonfinancial bankruptcies, they depend on private lenders to provide emergency liquidity.
In the ten years since the global financial crisis, the debt held by nonfinancial corporations has grown by $29 trillion – almost as much as government debt – according to new research by the McKinsey Global Institute.
Since 2007, the value of corporate bonds outstanding from nonfinancial companies has nearly tripled – to $11.7 trillion – and their share of global GDP has doubled.
Over the next five years, a record $1.5 trillion worth of nonfinancial corporate bonds will mature each year; as some companies struggle to repay, defaults will most likely rise.
In the US, 22% of nonfinancial corporate debt outstanding comprises “junk” bonds from speculative-grade issuers, and another 40% are rated BBB, just one notch above junk.
Between 2007 and the end of 2017, the value of Chinese nonfinancial corporate bonds outstanding increased from just $69 billion to $2 trillion.
Indeed, the weighted average interest rate on bank credit to nonfinancial enterprises remains close to 7%, while economic growth has edged down from 7.4% year on year in the last three months to 7.3% in the current quarter.
Of these, the most immediate threat to China’s economic and financial stability is the combination of high borrowing costs, low profitability for nonfinancial corporations, and very high corporate leverage ratios.
According to a study by the Chinese Academy of Social Sciences, the debt/GDP ratio for China’s nonfinancial corporations was 113% by the end of 2012.
Meanwhile, interest rates on bank loans to nonfinancial enterprises remain close to 7%, despite having fallen slightly over the last year.
And, in the second quarter of this year, the annualized interest rate on loans to small nonfinancial corporations surpassed 25%.
With insufficient profits to use for investment, nonfinancial corporations will become increasingly dependent on external finance.
Indeed, China must stem the pace of real-estate investment, which accounted for more than 13% of GDP in recent years – a move that will undoubtedly lead to slower economic growth and, in turn, reduce the profitability of China’s nonfinancial corporates further.
At the same time, the top 10% also owned nonfinancial assets (including primary residences) with a median value of $756,400 – nearly six times the value held by the other 90%.
Among US nonfinancial corporations, the proportion of investable funds used for dividends and share buybacks has been trending upward, albeit with cyclical ups and downs, since the 1980s.
A worrying development in this regard is the rapid rise in enterprise debt, which, according to various studies, now surpasses 120% of GDP – much higher than the leveraging rates of nonfinancial enterprises in major developed countries.
But it has also lost sight of the 1990’s – the first of its so-called lost decades – when the authorities did all they could to prolong the life of insolvent banks and many nonfinancial corporations.
To be sure, there can be no mistaking China’s mounting corporate debt problem – with nonfinancial debt-to-GDP ratios hitting an estimated 157% of GDP in late 2016 (versus 102% in late 2008).
Established nonfinancial firms have learned the hard way that they need to be careful with leverage and keep large cash cushions.
These large financial firms were provided a scale of assistance that was not generally available to the nonfinancial corporate sector – and certainly not to families who found that the value of their assets (their homes) was below the value of their liabilities (their mortgages).
The CER report is strongest on the real (nonfinancial) economic issues.
China’s nonfinancial debt has risen from 150% of GDP in 2008 to 255% today, with two-thirds of the increase concentrated in the corporate sector, largely state-owned enterprises (SOEs).
Alternatively, policymakers could look beyond trade in goods to consider capital flows and related businesses associated with US firms, effectively allowing the authorities to impede US financial and nonfinancial firms’ Chinese operations.
Moreover, though the Chinese government’s net financial worth (which excludes nonfinancial assets, the valuation of which remains uncertain) has deteriorated in recent years, it remains positive, at 8% of GDP in 2017.
Overall, we estimate that US investment-grade nonfinancial firms have kept about three-quarters of the money they borrowed in the first half of 2020 on their balance sheets.