This presentation is one perspective on Debt. It is not the only view. People are more than welcome to visit other sites like BEA, Stats Canada, OECD, Banks, etc.

1. WOODGROVE
BANK
DEBTISSUES–CANADA
ANDTHEWORLD–
ANALYSIS
By: Paul Young, CPA, CGA
October 17, 2019

2. WOODGROVE
BANK
PAULYOUNG - BIO
• CPA, CGA
• Financial Solutions
• SME – Business Process Changes
• SME – Risk Management
• SME – Close, Consolidate and
Reporting
• SME – Public Policy
• SME – Financial Solutions
• SME – Supply Chain Management
• Academia – Advance Accounting,
Public Finance and Advanced
Management Systems
Contact information:
Paul_Young_CGA@Hotmail.com

3. WOODGROVE
BANK
• This presentation is one perspective on Debt. It is not the only view. People are more than
welcome to visit other sites like BEA, Stats Canada, OECD, Banks, etc.

4. WOODGROVE
BANK
AGENDA
• What is debt
• Types of debt
• Market Forecast
• Government Debt
• Corporate Debt
• Consumer Debt

5. WOODGROVE
BANK
WHAT IS DEBT
• Debt is an amount of money borrowed by one party from another. Debt is used by many
corporations and individuals as a method of making large purchases that they could not afford
under normal circumstances. A debt arrangement gives the borrowing party permission to borrow
money under the condition that it is to be paid back at a later date, usually with interest.

6. WOODGROVE
BANK
TYPES
DEBT /
SEGMENTS
Corporate/Business
Household Debt
Government

7. WOODGROVE
BANK
GLOBAL FORECAST
What drives an Economy?
• Consumer Spending
• Exports
• Government Spending
Source -
http://www.scotiabank.com/ca/en/
about/global-
economics/economics-
publications.html

8. WOODGROVE
BANK
GOVERNMENT
DEBT
• Many government have Debt to GDP
ratios 92% or above
• Government Debt (Bonds)
• Yields are based on credit ratings
• Government debt
• Deficits
• New debt financing (Infrastructure,
operating requirements, etc.)
Source - https://www.cnbc.com/2019/01/23/government-debt-
tab-hits-66-trillion-80percent-of-global-gdp-fitch-says.html

9. WOODGROVE
BANK
CORPORATE
DEBT
• The corporate debt of non-financial firms across major
emerging markets rose sharply from about $4 trillion in
2004 to well over $18 trillion in 2014 - (Source – IMF)
• In the past six years,” the report stated, “the global
economy has enjoyed a benign default environment as
accommodative monetary policies have fueled the
corporate debt market with abundant liquidity, allowing
many low-rated issuers to refinance when needed. The
party is likely coming to an end soon as the global
default rate is expected to approach the historical
average mark by the end of 2016.” The default rate for
all corporate debt is expected to rise to 2.1%, Moody’s
said. That is up from 0.9% in 2014 and 1.7% in 2015. It
also would be the highest default rate since the 2008-
2009 crisis. If the rate is realized, it would translate to
138 defaults this year, up from 109 in 2015 (a 30%
increase) and 55 in 2014. (Source – Moodys)

10. WOODGROVE
BANK
HOUSEHOLD DEBT
Source: OECD
Household debt has risen markedly since
the turn of the century and stands at a
historically high level in most OECD
countries.
It examines the vulnerabilities associated
with high household debt for households,
the financial system and the wider economy.
Finally, it describes the challenges faced by
policymakers at the current juncture and
outlines responses in terms of monetary,
micro and macro-prudential, and housing
policies.

11. WOODGROVE
BANK
CORPORATE
DEBT
Source - https://www.cfo.com/credit-capital/2019/10/imf-
warns-of-19-trillion-corporate-debt-
risk/?utm_campaign=CFODailyAlert&utm_nooverride=1&ut
m_source=CFO-
email&utm_medium=email&utm_content=CFODailyAlert_
Wednesday_2019-10-16&utm_term=credit-capital
11

12. WOODGROVE
BANK
CANADA–
HOUSEHOLD
DEBT

13. WOODGROVE
BANK
HOUSING AFFORDABILITY INDEX
Source - https://www.numbeo.com/property-investment/rankings_by_country.jsp
2019
2015

14. WOODGROVE
BANK
RISKS
• Too many governments are running
deficits during good economic time
• Housing affordability is enormous
issue across the world
• Trade and protectionism policies
• Cheap Debt cannot last forever
• Hike in mortgage or personal credit
rates
• More consumer default
• Lower Credit rating for government
• Higher bond yields means higher
interest rates and higher debt
coverage