China will be the most badly hit in the event of stagflation, according to a stress test of 20,000 companies by the credit rating agency.
The company said over 90% of its sample was made up of unrated companies with debt totaling $37 trillion, representing 41% of total global corporate debt. The companies were categorized into four risk tiers: low, moderately low, moderately high, and high.
," S&P Global Ratings senior research fellow Terry Chan said the reasons for China's vulnerability are historical, a legacy from the years of high growth which led to Chinese companies becoming highly leveraged, or high in debt.from slowdown in growth and price pressures coming up from overseas because some of the components are being imported ... And that's why under the stress test, they seem to perform the worst," Chan said.
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