December 18, 2023

Global Debt

Visualizing $97 Trillion Of Global Debt In 2023

by Tyler Durden

Monday, Dec 18, 2023 – 06:55 AM

Global government debt is projected to hit $97.1 trillion this year, a 40% increase since 2019.

During the COVID-19 pandemic, governments introduced sweeping financial measures to support the job market and prevent a wave of bankruptcies. However, this has exposed vulnerabilities as higher interest rates are amplifying borrowing costs.

In the graphic below, Visual Capitalist’s Niccolo Conte and Dorothy Neufeld show global debt by country in 2023, based on projections from the International Monetary Fund (IMF).

Debt by Country in 2023

Below, we rank countries by their general government gross debt, or the financial liabilities owed by each country:

With $33.2 trillion in government debt, the U.S. makes up over a third of the world total.

Given the increasing debt load, the cost of servicing this debt now accounts for 20% of government spending. It is projected to reach $1 trillion by 2028, surpassing the total spent on defense.

The world’s third-biggest economy, Japan, has one of the highest debt to GDP ratios, at 255%. Over the last two decades, its national debt has far exceeded 100% of its GDP, driven by an aging population and social security expenses.

In 2023, Egypt faces steep borrowing costs, with 40% of revenues going towards debt repayments. It has the highest debt on the continent.

Like Egypt, several emerging economies are facing strain. Lebanon has been in default since 2020, and Ghana defaulted on the majority of its external debt—debt owed to foreign lenders—in 2022 amid a deepening economic crisis.

Global Debt: A Regional Perspective

How does debt compare on a regional level in 2023?

We can see that North America has both the highest debt and debt to GDP compared to other regions. Just as U.S. debt has ballooned, so has Canada’s—ranking as the 10th-highest globally in government debt outstanding.

Across Asia and the Pacific, debt levels hover close to North America.

At 3.3% of the global total, South America has $3.2 trillion in debt. As inflation has trended downwards, a handful of governments have already begun cutting interest rates. Overall, public debt levels are projected to stay elevated across the region.

Debt levels have also risen rapidly in Africa, with an average 40% of public debt held in foreign currencies—leaving it exposed to exchange rate fluctuations. Another challenge is that interest rates are also higher across the region compared to advanced economies, increasing debt-servicing costs.

By 2028, the IMF projects that global public debt will exceed 100% of GDP, hitting levels only seen during the pandemic.

https://www.zerohedge.com/markets/visualizing-97-trillion-global-debt-2023

December 10, 2023

Winter is Coming

“Winter Is Coming” For Leveraged Companies 

by Tyler Durden

Friday, Dec 08, 2023 – 12:45 PM

Earlier in the year, as regional banks faced a domino effect of failures, Bank of America strategist Michael Hartnett pointed out that every Fed tightening cycle has historically resulted in a crisis.

Given that the Federal Reserve hasn’t allowed a real credit cycle since the early 2000s, prolonged monetary tightening suggests that “winter is coming” for leveraged companies. 

“The whole market and companies have been living in this la la land, this fake world of wealth of quantitative easing where you can borrow at 1% or 2%, you can buy anything, you can make lots of mistakes and you’re not going to get called out,” said Paul Horvath, chief executive officer at investment firm Orchard Global. 

Horvath, speaking at the Milken Institute’s Middle East and Africa Summit in Abu Dhabi this week, was quoted by Bloomberg. He warned: “Winter is coming, and I don’t think people have enough parkas.”

The asset manager head said financial markets are holding up well so far, given the high rates. He noted corporates are levered up due to private equity firms buying up companies with cheap money, adding a global financial crisis might not be in the cards – but expects there will still be stress. 

Bloomberg pointed out there were record levels of dealmaking during the pandemic era of cheap money. This led to a surge in private equity buyouts, backed by leveraged finance and the debt load placed on the target company. A large amount of that debt for junk-rated firms is coming due as large maturity walls approach. 

Also speaking at the event was SLR Capital Partners co-founder Michael Gross, who said there is no easy solution for companies needing to refinance this debt. 

“It’s going to take more than public markets coming back,” Gross said, adding, “It’s going to probably require private equity sponsors to find unique solutions like putting in more equity or finding preferred investors to step into the capital structures.”

Gross said managing portfolio companies with outdated debt structures will also face challenges for private credit funds.

He explained that funds were structured in a world of “perfection” based on an era of low interest rates, but that has all changed. 

A higher for the longer environment with mounting macroeconomic headwinds only means over-leveraged firms are increasingly falling into distressed

The impact of this tightening cycle could be worse than the Great Recession – unless the Fed reverses course. 

Rate traders are already pricing more than 100bps of rate cuts for 2024. 

Meanwhile, Anne Walsh, chief investment officer of Guggenheim Partners Investment Management, said the US economy “hasn’t had a real corporate credit cycle since the early 2000s,” indicating a “purge is about to happen.” 

https://www.zerohedge.com/markets/winter-coming-leveraged-companies

December 6, 2023

PFA Elects New Officers

Polyurethane Foam Association Elects New Officers, Names
Additions To Executive Committee for 2024

Philipe Knaub Takes Reins As President

LOUDON, TN (December 5, 2023)—The Polyurethane Foam Association (PFA) has named its
officers and Executive Committee for 2024. The slate of officers and committee members was
approved by attendees at the General Business Meeting on November 2, 2023 in Toronto.

Officers include:

 Philippe Knaub, FXI, President
 Rob Heller, Future Foam, 1st Vice President
 Cam McLaughlin, Elite Comfort Solutions, 2nd Vice President
 Hamdy Khalil, The Woodbridge Group, Treasurer
 Bill Gollnitz, Immediate Past President.

Additional PFA Executive Committee members include:
 Frank Donato of VPC
 Karl Gust, BASF
 Scott Skolnekovich, Covestro
 Susan Kilpatrick, Evonik
 Rob Einterz, Monument Chemical
 Robert Smith, Wanhua
 Barry Gabelman, Chemfoam.

Knaub takes over the presidency from Chip Holton of NCFI Polyurethanes, who had served in
the position since 2015.

Knaub is Senior Vice President and Chief Technology Officer of FXI, a
position he has held since 2016. He supervises all research and development projects, reporting
to the company’s Chief Executive Officer. He is accountable for all aspects of R&D and product

development, including project portfolio management, discovery, scale ups and
commercialization of new polyurethane foams.

Knaub earned a Ph.D. in Polymer Science from the Institut National des Sciences Appliquées de
Lyon. He holds multiple patents in polyol composition.
“PFA is a vital organization in the flexible polyurethane foam industry,” Knaub said. “I look
forward to working with my colleagues in the industry to further PFA’s programs in advocacy
and education.”

The Polyurethane Foam Association is a trade association founded in 1980 to help educate foam
users, allied industries and other stakeholders. PFA provides facts on environmental, health and
safety issues and technical information on the performance of flexible polyurethane foam (FPF)
in consumer and industrial products. FPF is used as a key comfort component in most
upholstered furniture and mattress products, along with automotive seating, carpet cushion,
packaging, and numerous other applications.

To learn more, visit www.pfa.org.

November 28, 2023

Panama Canal Congestion

Panama Canal Congestion Causes MDI Price Increase in South America

PUdaily | Updated: November 27, 2023

The Panama Canal is Witnessing a Congestion with over 120 Ships Queueing

The Panama Canal Authority said on November 13 that approximately 126 ships were awaiting passage at the canal entrance, with potential waiting times of up to 12 days. To address the backlog of vessels, the authority holds auctions for those wishing to jump to the front of the line. In the latest auction, a Japanese energy group paid nearly USD 4 million to secure the crossing for its liquefied petroleum gas tanker, setting a new record and significantly increasing the transportation cost of transit goods.

El Niño Phenomenon Causes Congestion in the Panama Canal

Since the beginning of this year, the drought caused by the El Niño phenomenon has been affecting the water reservoir system of the Panama Canal, leading to a reduced supply of freshwater necessary for the operation of the locks. As a result, the Panama Canal Authority has repeatedly slashed the number of daily transiting vessels. Additionally, the authority has also lowered the permissible draft of ships, forcing vessels passing through the canal locks to reduce their weight or cargo load. This drove up the delivery time and logistics costs. In August, the canal experienced the first wave of congestion, with 200 vessels were floating at both ends of the dried up canal. Recently, the congestion issue has become more severe, significantly impacting global trade.

Panama Canal Congestion Affects Delivery Times and Costs between North and South America, Asia, and Europe

The Panama Canal, with a total length of 81.3 kilometers, connects the Atlantic Ocean and the Pacific Ocean. It is a lock-type canal where ships need to navigate through a series of locks to raise or lower the water level in order to traverse the canal located between the Central American mountain range. Alongside the Suez Canal, the Panama Canal plays a crucial role in global trade and economic development. The canal currently serves a total of 180 maritime routes that link 1,920 ports across 170 countries, the authority reported. The most significant trade routes serviced by the canal involve the US East Coast-Asia, US East Coast-South America West Coast, and Europe-South America West Coast routes.

MDI Prices are Moving up in South America

South American countries mainly import MDI from U.S., Europe, China, Japan, and South Korea. Due to the congestion in the Panama Canal and recent heavy rainfall in Brazil causing flooding in many ports, ships have been unable to dock, leading to delays in MDI imports and tight supply. As a result, some MDI suppliers have recently raised their quotations. PMDI prices in South America have moved up from the previous USD 1,900/tonne to the current range of USD 1,950-2,000/tonne.

https://www.pudaily.com/Home/NewsDetails/42390

November 20, 2023

Mattress Recycling Council tops the 10 million mattress mark in California

California reaches mattress recycling milestone

Since the launch of the Bye Bye Mattress campaign in California, the state has recycled 10 million mattresses.

Posted by Bob Gaetjens | November 14, 2023

More than 10 million mattresses have been recycled in California since the Mattress Recycling Council (MRC) launched the Bye Bye Mattress program in the state.

The organization, which has operations in several states, reached that milestone nationally in March 2022.

If laid end-to-end, that is enough mattresses to stretch from California’s coastline to the middle of the Indian Ocean. As a result, recyclers have diverted more than 380 million pounds of steel, foam, fiber and wood from landfills and made them available for use in new products such as carpet padding, construction rebar and mulch.

“By reducing the demand to use virgin materials in other products, mattress recycling is contributing to California’s other important environmental goals—saving water, conserving energy and preventing greenhouse gas (GHG) emissions,” MRC Chief Operating Officer Mike O’Donnell says. “We have the data to prove it too. A recent analysis of our California program’s environmental footprint from collection to recycling shows that each mattress recycled saves 500 gallons of water, conserves enough energy to power a house for three days and reduces greenhouse gas emissions equivalent to driving 60 fewer miles.”

MRC’s Bye Bye Mattress is a statewide network of collection sites and events serving urban and rural communities across California that is made possible through collaborations with solid waste providers and nonprofit organizations. A growing number of waste haulers collecting bulky items at the curb are also recycling mattresses through the program.

Mattresses are transported from participating collection locations to regional recyclers, where they are dismantled into their different component parts. Mattress retailers, hotels, dormitories, nursing homes, military bases and other types of businesses also are working with MRC to have their old mattresses collected and recycled by the program.

“We are proud of what we have accomplished in California, but we know there are opportunities for the program to innovate and evolve,” O’Donnell says. “This is why we are supporting the industry’s broader efforts to encourage circular design and sustainability initiatives.”

The MRC undertakes research to improve collection, transportation and recycling processes. This includes providing research firms and educational institutions up to $100,000 in funding for projects aimed at discovering new uses for mattress materials. To date, MRC has awarded funds to more than 30 projects and is seeing some promising outcomes.

“One day, recycled mattress materials may help [electric vehicle] batteries hold longer charges or be used to make shoe soles or clean up oil spills,” O’Donnell says. “We need innovators to create new uses for polyurethane foam, quilt panels, cotton and mixed fibers.”

In addition to Bye Bye Mattress, MRC’s other California activities include offering mattress manufacturing facilities in the state an environmental certification program known as the Sleep Products Sustainability Program (SP2), which encourages conservation and resource efficiency.

“All these accomplishments are possible because MRC has the support of the mattress industry, mattress retailers, the solid waste industry and state agencies that provide oversight and guidance for our programs,” O’Donnell says. “We are also grateful to the international community of mattress recyclers and product stewardship organizations for sharing their best practices, collaborating on research projects and their commitment to sustainability.”

The MRC is an Alexandria, Virginia-based nonprofit organization that operates recycling programs in states that have passed mattress recycling laws, including California, Connecticut and Rhode Island. MRC was founded by the bedding industry and recycles nearly 2 million mattresses each year.

https://www.recyclingtoday.com/news/mattress-recycling-council-bye-bye-california-milestone/