By the end of 2027, the DAX companies alone will have to refinance over 100 billion euros. The rapidly rising interest rates are depleting the financial strength of companies. But there are ways out.
Rising interest rates: bonds are a main source of financing for large companies Photo: Getty Images [M]
The interest rate for corporate bonds with good and medium credit ratings rose from 3.5 to 4.5 percent in twelve months, and most recently from 4.0 to 4.5 percent within four weeks.
The DAX companies will have to refinance a total of 244 billion euros in bonds by the end of 2029, with a total volume of 562 billion euros in outstanding bonds.
About half of the debt due next year is attributable to companies with poor or no ratings, including many medium-sized companies that expect stricter financing conditions.
Companies such as Bayer, Eon, Deutsche Telekom, Continental, Siemens and BASF are facing increasing refinancing burdens due to rising interest rates and high debt levels and sometimes have to repay or re-place large sums at short notice.
The summary was created and editorially checked using AI.
Dusseldorf. The turbulence on the bond markets and rapidly rising interest rates are putting increasing strain on indebted companies. Rainer Bizenberger, partner at the consulting firm Alix Partners, expects: "The financing burden on companies has been increasing for years. This development has now increased dramatically."
The recent development of the bond interest rate for companies with good and medium credit ratings shows how explosive the situation is. This has increased from an average of 3.5 to 4.5 percent in the past twelve months. In the last four weeks, the interest rate rose dramatically from 4.0 to 4.5 percent.
Particularly affected are companies that have to place large volumes of bonds in a timely manner, as well as companies with poor credit ratings from the rating agencies. The Handelsblatt Research Institute (HRI) has calculated how high the refinancing needs of DAX companies are - and which of them stand out.
Bonds are a major source of financing for large companies, far more so than loans. You pay creditors a fixed interest rate for a certain period of time, which is based on the market. The bonds are traded on the stock exchange.
Responsible for the recent rise in interest rates for corporate bonds are, among other things, the drastically increased oil prices as a result of the war in the Gulf, the persistently high inflation and the escalating debt in many nation states. In addition, the central banks in Europe and the USA increased their key interest rates.
This year, the DAX companies will have to refinance expiring bonds for almost 30 billion euros if they do not repay these debts. A further 73.5 billion euros will be due next year. These calculations by the Handelsblatt Research Institute (HRI) are based on data from company balance sheets and the financial specialist Bloomberg.
As a result, a total of 244 billion euros will have to be newly financed by 2029. The data analysis shows that the DAX companies have a total of 562 billion euros in bonds outstanding. The listed DAX companies with the highest net financial debt include Bayer with 33 billion euros, Eon with 37 billion, Vonovia with 41 billion and Deutsche Telekom with 138 billion euros.
Many medium-sized companies lack a rating
However, if you take into account a larger group of companies in Germany, the dimensions also grow. Around half of the debt due next year is attributable to companies that have a poor rating or no rating at all - this includes many German medium-sized companies.
This is proven by the forthcoming “debt report” from Alix Partners, which is available to Handelsblatt. Alix partner Alban Baiker says: “These companies not only have to expect higher financing costs, but also stricter financing conditions.”
The ECB in Frankfurt: In June the central bank raised key interest rates. Photo: Andreas Arnold/dpa
All DAX companies with a published company rating are classified as investment grade. This means that companies can continue to place new bonds on the market without any problems, albeit with higher interest charges.
In the MDax, however, there are several companies with a rating below investment grade, such as Thyssenkrupp, the chemical company Lanxess and the automotive supplier Schaeffler. There are also possible risk premiums.
» Also read: Why the stock markets ignored the rise in interest rates for so long
The interest burden has been rising for years, robbing indebted companies of the financial strength to urgently invest in digitalization, decarbonization and innovations. “This hits companies at a time when they are already struggling with rapidly rising costs,” says Alix partner Binzenberger.
Another effect of high interest rates: They make the investment projects for which companies take out debt more expensive, thereby making them riskier.
Almost 30 percent of German companies' free cash flow is now used for interest payments. This is proven by the data from Alix Partners. This share was still around 15 percent in 2019, i.e. in times of low interest rates that lasted until 2022. At that time, loans and bonds were available for less than two percent interest per year. Some companies even managed to take on new debt without paying interest. But those times are over.
The development of bonds that are traded daily on the market shows how expensive new debt is. A look at selected DAX companies:
Eon: In 2024, the energy company issued a bond for one billion euros with a term until 2044 and an interest rate of four percent. This bond now yields 4.8 percent on the market. That's roughly how much Eon would have to pay today for a new, similarly long-term bond. Eon's financing needs are immense with a total bond volume of 33.7 billion euros. Bonds worth 2.6 billion euros will be due by the end of next year and 7.8 billion euros by the end of 2029.
Deutsche Telekom: The interest rate development for Deutsche Telekom is drastic. At the beginning of last year, the group issued a bond running until 2045 with a coupon of 3.625 percent. But Telekom must be prepared to have to offer its debtors a lot more in the future. This bond is now traded on the open market at an interest rate of 4.8 percent.
Telekom's AI factory: Telekom borrowed a total of 99 billion euros from bondholders. Photo: Deutsche Telekom
In the last financial year, Telekom had to bear by far the highest interest expenses of all listed German companies, at 6.5 billion euros. Telekom borrowed a total of 99 billion euros from bondholders.
Of these, bonds with a volume of 24 billion euros will be due by the end of 2029, and 6.3 billion euros will be due in 2027 alone. However, management has been spreading the maturities and thus its refinancing needs evenly over the coming decades for years.
Continental: The rising interest rates are particularly explosive for companies that will soon have to refinance a large part of their debt. The automotive supplier Continental has outstanding bonds worth a total of 4.6 billion euros. Just over a billion euros are due every year. The automotive supplier must refinance all outstanding bonds or pay off its debts by the end of 2029.
This money has to be earned first. In 2025, Continental reported a profit before taxes and interest of just 261 million euros. However, analysts are forecasting a significantly higher profit of 1.9 billion euros for the current financial year, also based on the first half of the year.
Siemens headquarters in Munich: Bonds with a volume of 3.9 billion euros will be due next year alone. Photo: dpa
Siemens: Companies whose debts have increased since the end of the low interest rate phase are also under pressure. Since the end of the 2023 fiscal year, Siemens' net financial liabilities increased from 7.9 to 9.3 billion euros at the end of the third fiscal quarter at the end of July. Bonds with a volume of 3.9 billion euros will come due next year alone, and a further 5.2 billion euros in 2028.
Bayer: The Leverkusen-based group has bonds worth 38.6 billion euros outstanding. The group clearly shows how expensive new bonds are now. Two weeks ago, Bayer easily placed a volume of two billion euros; the interest rate is between 5.75 and 6.25 percent, depending on the term of the securities. Six years ago the interest rate was around one percent.
Related topics
BayerDaxDeutsche TelekomBASFContinentalEon
BASF plant in Ludwigshafen: The chemical company has bonds worth 12.6 billion euros outstanding. Photo: obs
However, the group will not have to completely refinance these debts. In September, the US financial investor Apollo acquired shares in a new Bayer company for the marketing of long-term contraceptives. The deal will bring in three billion euros in the short term, which Bayer wants to use to reduce debt. This brings relief in view of the rapidly rising interest rates.
BASF: The chemical company has bonds worth 12.6 billion euros outstanding, of which 2.3 billion euros are due next year. BASF has net financial debt of 17 billion euros. When presenting its half-yearly balance sheet, BASF announced that it wanted to reduce it significantly. Bonds and loans with a volume of 1.6 billion euros are to be repaid early this year.
More: When high interest rates become a problem for stocks
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