The most significant risks to corporate credit are defaults in China, the world’s largest corporate borrower, and the surge in leveraged finance in the U.S., according to a report from Standard & Poor’s.

China’s corporate debt pile, now $16.1 trillion, is set to climb 77% to $28.8 trillion over the next five years, S&P estimates. At 160% of GDP, the current debt is twice that of the United States.

“We expect Chinese corporations to continue their market dominance by issuing the lion’s share of global corporate debt over the next five years,” Jayan Dhru, global head of corporate ratings and infrastructure at S&P, said in a news release.

“However, the rapid growth in debt, the opaque nature of its markets, high debt-to-GDP, and potential moral hazard created by state support all point to relatively high credit risks in China,” he added.

As Reuters reports, Beijing’s policy interventions affecting corporate credit have so far been mostly designed to support economic growth, which is set to fall to a 25-year low this year. It has cut interest rates four times since November, reduced the level of reserves banks must hold, and removed limits on how much of their deposits they can lend.

China’s banks made 1.28 trillion yuan ($206 billion) in new loans in June, well above May’s 900.8 billion yuan. “When the credit taps are opened, risks rise that the money is going to ‘problematic’ companies or entities,” Louis Kuijs, RBS chief economist for Greater China, told Reuters.

Overall, S&P predicts that global corporate debt demand will peak at an estimated $57 trillion by 2019, a decline of 4% from what it had estimated through 2018. Global credit risk is expected to be moderate and analysts expect $37 trillion of demand to come from refinancing requests, along with $20 trillion in new issuance.

In the U.S., Dhru said, the growth of the leveraged finance segment also suggests increased risks. “The seeds of tomorrow’s debt crisis may already have been sown” in China and the United States, he warned.

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