When starting their dream business, most entrepreneurs don’t fantasise about astronomical levels of debt. But for many of the biggest, most admired companies, debt is an ordinary fact of life.
There are many reasons that apparently profitable, cash-rich companies maintain vast amounts of debt. One reason is that the timing of debt repayments in relation to interest rates can make a huge difference with sums of this magnitude. At the same time, companies can reduce their tax burden by offsetting tax-deductible debt interest against their profits.
For smaller companies, debt can be an effective means of growing the business faster than with revenue alone. Acquiring credit allows you to invest in marketing, build inventory and expand your facilities and scope.
But which big companies are operating with the highest levels of corporate debt right now?
BusinessFinancing.co.uk ranked the world’s most indebted companies based on total debts for the most recent fiscal year, using data from Companies Market Cap — and we’ve shared our findings in a new set of data visualisations below.
- Mortgage firm Fannie Mae is the world’s most indebted company, with $4.232 trillion in debt.
- Among the 100 global companies with the most debt, U.S. companies account for $10.8 trillion or 60.13% of what is owed.
- Toyota is the world’s most indebted company outside the financial industries, owing $221.13 billion.
- The world’s most indebted tech companies are Amazon ($138.91 B) and Apple ($109.28 B).
The 50 Most Indebted Companies in the World
Two U.S. mortgage companies lead by a significant distance. Fannie Mae and Freddie Mac each have trillions of dollars in debt; first-placed Fannie Mae has 7.87 times the debt of third-placed JPMorgan Chase, which has $537.36 billion in debt. (To put these figures in perspective, consider this visualisation: a million seconds is 11.5 days, a billion seconds is 31 years and a trillion seconds is 31,688 years.)
Here are the 50 global companies with the greatest debt, scaled according to what proportion of those 50 companies’ debt they owe:
Some 43 of the 50 most indebted companies are in banking or finance. Fannie Mae and Freddie Mac are known as America’s “ugly twins of finance,” and their business model involves borrowing money from other lenders and repackaging it for consumers. This involves a measured risk, and these financers exemplify the practices that led to the 2008 financial crisis.
As a paper from the Federal Reserve Bank of New York describes it, these companies’ “concentrated exposure to U.S. residential mortgages, coupled with their high leverage, turned out to be a recipe for disaster in the face of a large nationwide decline in home prices and the associated spike in mortgage defaults.”
The 100 most indebted companies in the world have a combined debt of $17.96 billion. We grouped these companies by country to see which parts of the world hold most of this debt. And we found that the U.S. has the lion’s share, owing $10.8 trillion or 60.13% of that total. China is second, with $2.7 trillion or 12.81% of the total, while the UK is sixth, with $690 billion (3.65%), as shown in our visualisation below.
Corporate debt rose by £79 billion in the UK during the first year of COVID-19 and most significantly among small, non-listed businesses. The debt levels of small and medium-sized enterprises in the hospitality, arts and recreation industries rose by one-third.
Today, high-interest rates are putting a strain on larger UK companies with high levels of corporate debt. For example, Thames Water found itself £14 billion in debt this summer, having over-borrowed to fund new investments in better times. This figure was equivalent to 80% of Thames Water’s total value, and the company narrowly avoided being nationalised when shareholders stepped in with extra finance.
Eight of the ten tech companies with the most debt are in the U.S. While Amazon’s “profitless path” to success is well-documented, Apple is a more surprising contender among the most indebted companies.
However, it stands to reason that Apple should maintain a certain level of debt, which carries lower financing costs compared to equity when investing in new projects. At the same time, Apple is making so much cash that the company could, in turn, become a lender, offering financial services to consumers.
Toyota is the most indebted auto firm, leading a pack of manufacturers with over $100 billion in debt each. In addition to issuing loans to help consumers afford their cars, automakers depend very much on forward momentum — particularly in moments of change, such as the present transition to electric motoring. This requires vast sums of investment.
“Being a player in a highly competitive sector, R&D constitutes a significant chunk of Toyota’s budget,” explains Edith Reads, financial lead at StockApps. The company entered the EV market somewhat late, announcing as late as 2021 a $35 billion investment in electric cars and the same amount again for hybrids and hydrogen fuel cell vehicles.
Amazon and Walmart generate comparable revenue levels. But Amazon remains way ahead, in the U.S. and globally, regarding corporate debt in the retail sector. The company issued $8.25 billion of investment-grade bonds in 2022 to calm investors’ nerves as interest rates crept up.
The company famously took a long time even to turn a profit. Today, they have money to play with. “They can grow into this leverage,” said Matt Brill of Invesco Ltd. when Amazon pulled a similar move a year previously. “If you’re able to borrow for reasonably cheap, and then you’re able to get the operating leverage to go with it, it results in a lot of earnings.”
JPMorgan Chase Leads International Cast of High-Debt Banks
Since banks are in the business of lending, they need to source cash to lend in the first place. They also have sophisticated strategies for leveraging debt for profit while managing risk carefully. Since this is the very nature of banking, the top ten most indebted banks are spread more evenly across a variety of the world’s biggest economies compared to other business sectors, which have a higher concentration of debt in one region or another due to local practices and market domination.
Europe’s banks are no exception. BNP Paribas is the eurozone’s biggest bank and has the second-highest corporate debt of any bank globally.
Comcast is the world’s biggest media company and the most indebted. It has 106.24% more debt than Warner Bros. Discovery, which is the second biggest. Comcast spent $40 billion on acquiring Sky in 2018 in a move that tanked the company’s stocks, with investors concerned that Comcast had overpaid in the deal.
“If there’s an economic slowdown or interest rates continue to rise, I’m not sure these companies will look back and think that it was such a good idea to pile on the debt,” said Hal Vogel, CEO of Vogel Capital Management, at the time. Five years on, Comcast still has risky debt levels, even as it invests huge sums in its struggling internet business.
French fashion debt, like French fashion, is fabulous. Both LVMH and Dior are owned by the French
fashion tycoon Bernard Arnault and the two brands share a debt of $41.5 billion — ranking them as
the most indebted in the fashion sector.
LVMH owns 75 luxury brands in total with Dior acting as one of their investment vehicles. They
soared to new levels of success after taking on additional debt to acquire Tiffany’s in 2021, a deal
that the buyer briefly tried to get out of, perhaps due to worries over the impact of COVID-19. In
fact, low-interest rates made the deal highly advantageous in retrospect. LVMH again sold off debts
at the start of 2023 in the light of surprisingly high demand for luxury goods.
Fannie Mae and Freddie Mac Debts Tower Over Finance Industry
Finance companies borrow money to repackage and re-loan, which is why the finance sector has the most indebted companies in our study. These are led by Fannie Mae and Freddie Mac, America’s finance giants, which were created by Congress “to provide liquidity, stability and affordability to the mortgage market” (see The 50 Most Indebted Companies in the World above).
China’s third largest bank, the Agricultural Bank of China (AgBank), also makes the top ten. AgBank has been hit by increased debts following “a mortgage boycott on unfinished projects that has swept the country,” reports Bloomberg, explaining that “Chinese banks’ exposure to the property sector tops that of any other industry, making them vulnerable to the woes that have already roiled capital markets and burned the nation’s middle class.”
Two UK oil companies feature among the global top ten for corporate debt, including the overall number one: Shell. The company states its strategy is to “maintain a strong balance sheet which provides, through the commodity cycle: efficient access to the debt capital markets; financial resilience; and sufficient flexibility for continued growth.”
In fact, Shell is enjoying record profits right now in light of massive price hikes for consumers. “Shell handed more back to its shareholders last year than it invested in any type of future energy, clean or dirty,” reports the Financial Times. “[I]ts overall capital expenditure was about $24.8bn, of which just $3.5bn was spent in its renewables and energy solutions business.”
Real estate is another sector that leans disproportionately on massive upfront investments, building properties with borrowed cash long before they can be sold. And so, it is another sector with a broad international cast of high-debt companies.
The most indebted real estate company is Brookfield Property Partners in Bermuda ($68.77 billion). The company is currently negotiating maturing debts as interest rates rise and property values fall, particularly regarding office spaces, in which the firm is highly invested. S&P analysts Michael Souers and Ana Lai blame Brookfield’s “deteriorating interest coverage metrics, continued secular challenges facing the company’s office properties, and a capital structure with a material amount of near-term, floating-rate debt” for the company’s fluctuating credit status.
For many companies, a certain level of wisely managed corporate debt is both normal and healthy. But, as economic sociologist and former Wall Street trader Adam Hayes puts it, “[w]hether a zero-debt approach aligns with a company’s objectives will depend on its unique circumstances, making it an intriguing, but not universally applicable, avenue for financial management.”
As the companies above demonstrate, it is possible to thrive when a company controls its debts — but riskier when those debts get out of hand.
To determine the world’s most indebted companies, we reviewed data on debt for 7,921 public companies from CompaniesMarketCap. Companies were ranked based on total debt obligations for the most recent fiscal year. We categorised companies into major sectors, including technology, automotive, retail, media, banking, fashion, financial services, oil & gas and real estate. This analysis was completed in December 2023.