$2 Trillion Inflation-Linked Debt Headache Arrives.

An ignored area of the UK investment market is churning, pointing trouble to corporate debt exposed to inflation. Thames Water, UK’s largest water supplier is in talks with government officials to handle it’s £14 billion debt pile. The situation has become troublesome because of it’s use of inflation-linked bonds which has remained high in the UK.

Due to the increase in interest rates to tame inflation, companies have been impacted in two ways: they are paying more interest on debt and their inflation-linked obligations are growing bigger. There is around $2 trillion of this kind of debt worldwide.

This means that these companies might end up claiming relief from the government which comes in the form of taxpayer money.