debt

March 8 (Asia Today) — Forced stock sales in South Korea surged this week as rising market volatility triggered margin calls for investors who borrowed money to buy shares.

According to the Korea Financial Investment Association, forced liquidations totaled 77.7 billion won ($58 million) as of Wednesday, the eighth-largest amount recorded since the data began in 2006.

Outstanding margin balances also climbed to 2.15 trillion won ($1.6 billion), the highest level on record.

The sharp increase follows a strong rally in South Korean stocks earlier this year, driven largely by optimism surrounding artificial intelligence and semiconductor demand. However, geopolitical tensions in the Middle East have increased market volatility and halted the rally, prompting forced selling by heavily leveraged investors.

Margin balances occur when investors purchase stocks through brokerage accounts but fail to fully pay for the shares by the settlement deadline. If the funds are not repaid within two business days, brokerage firms may liquidate the holdings to recover the debt.

Analysts say the surge in forced sales highlights structural vulnerabilities in the South Korean stock market.

After tensions escalated in the Middle East, major East Asian markets including Japan, China, Taiwan and Hong Kong fell about 1% to 5% on the first trading day. South Korea’s market, however, dropped more than 12%, reflecting its heavier concentration in semiconductor stocks that had previously surged during the AI-driven rally.

The scale of outstanding margin balances has more than doubled since the start of the year. On the first trading day of 2026, unpaid balances totaled about 927.3 billion won ($690 million).

Because forced liquidations typically follow unpaid margin balances from the previous trading day, analysts warn that additional selling pressure could emerge if the outstanding balances remain elevated.

Yang Jun-seok said investors relying on borrowed funds should adopt a more cautious strategy.

“While the AI rally could continue supporting the broader market, volatility may increase due to developments related to Iran,” Yang said. “Investors using leverage are particularly vulnerable to market shocks and should consider exit strategies.”

— Reported by Asia Today; translated by UPI

© Asia Today. Unauthorized reproduction or redistribution prohibited.

Original Korean report: https://www.asiatoday.co.kr/kn/view.php?key=20260309010002100

Paramount Skydance’s jubilation over its come-from-behind victory to claim Warner Bros. Discovery has entered a new phase:

Call it the deal-debt hangover.

Two major ratings agencies have raised concerns about Paramount’s credit because of the enormous debt the David Ellison-led company will have to shoulder — at least $79 billion — once it absorbs the larger Warner Bros. Discovery, bringing CNN, HBO, TBS and Cartoon Network into the Paramount fold.

Fitch Ratings said Monday that it placed Paramount on its “negative” ratings watch, and downgraded its credit to BB+ from BBB-, which puts the company’s credit into “junk” territory. Fitch said it took action due to “uncertainty” surrounding Paramount’s $110-billion deal for Warner Bros. Discovery, which the boards of both companies approved on Friday.

S&P Global Ratings took similar action.

To finance the Warner takeover, Ellison’s billionaire father, Larry Ellison, has agreed to guarantee the $45.7 billion in equity needed. Bank of America, Citibank and Apollo Global have agreed to provide Paramount with more than $54 billion in debt financing.

“Potential credit risks include the prospective debt-funded structure, Fitch’s expectation of materially elevated leverage and limited visibility on post-transaction financial policy and capital structure,” Fitch said.

Late last week, Paramount sent $2.8 billion to Netflix as a “termination fee” to officially end the streaming giant’s pursuit of Warner Bros. That payment paved the way for Warner and Paramount’s board to enter into the new merger agreement.

Paramount hopes the merger will be wrapped up by the end of September. It needs the approval of Warner Bros. Discovery shareholders and regulators, including the European Union.

Paramount executives acknowledged this week the new company would emerge with $79 billion in debt — a considerably higher total than what Warner Bros. Discovery had following its spinoff from AT&T. That 2022 transaction left Warner Bros. Discovery with nearly $55 billion of debt, a burden that led to endless waves of cost-cutting, including thousands of layoffs and dozens of canceled projects.

Warner still has $33.5 billion in debt, a lingering legacy that will be passed on to Paramount.

Paramount plans to restructure about $15 billion in Warner Bros. Discovery’s existing debt.

Paramount CEO David Ellison at a 2024 movie premiere for a Netflix show.

(Evan Agostini / Invision / AP)

Paramount told Wall Street it would find more than $6 billion in cost cuts or “synergies” within three years — a number that has weighed heavily on entertainment industry workers, particularly in Los Angeles.

Hollywood already is reeling from previous mergers in addition to a sharp pullback in film and television production locally as filmmakers chase tax credits offered overseas and in other states, including New York and New Jersey.

Some entertainment executives, including Netflix Co-Chief Executive Ted Sarandos, have speculated that Paramount will need to find more than $10 billion in cost cuts to make the math work. More recently, Sarandos went higher, telling Bloomberg News that Paramount may need $16 billion in cuts.

Cognizant of widespread fears about additional layoffs, Paramount Chief Operating Officer Andrew Gordon took steps this week to try to tamp down such concerns.

Gordon is a former Goldman Sachs banker and a former executive with RedBird Capital Partners, an investor in Paramount and the proposed Warner Bros. deal. He joined Paramount last August as part of the Ellison takeover.

During a conference call Monday with analysts, Gordon said Paramount would look beyond the workforce for cuts because the company wants to maintain its film and TV production levels.

Paramount plans to look for cost savings by consolidating the “technology stacks and cloud providers” for its streaming services, including Paramount+ and HBO Max, Gordon said. The company also would search for reductions in corporate overhead, marketing expenses, procurement, business services and “optimizing the combined real estate footprint.”

It’s unclear whether Paramount would sell the historic Melrose Avenue lot or simply centralize the sprawling operations onto the Warner Bros. and Paramount lots in Burbank and Hollywood.

Workers are scattered throughout the region.

HBO, owned by Warner Bros. Discovery, maintains its West Coast headquarters in Culver City; CBS television stations operate from CBS’ former lot off Radford Avenue in Studio City; and CBS Entertainment and Paramount cable channels executive teams are located in a high-rise off Gower Street and Sunset Boulevard, blocks from the Paramount movie studio lot.

“The combination of PSKY and WBD could create a materially stronger business than either individual entity,” Standard & Poor’s said in its note to investors. “However, this transaction presents unique challenges because it would involve the combination of three companies, with the smallest, Skydance, being the controlling entity.”

David Ellison’s production firm, Skydance Media, was the entity that bought Paramount, creating Paramount Skydance.

Ellison has not announced what the combined company will be called.

Paramount shares closed down more than 6% Tuesday to $12.45.

Warner Bros. Discovery fell 1% to $28.20. Netflix added less than 1% to close at $97.70.

Economists are cautiously optimistic that advances in artificial intelligence could boost productivity across major economies, potentially helping governments manage soaring debt. Debt levels in most rich nations already exceed 100% of GDP and are projected to rise further due to ageing populations, higher defence spending, climate commitments, and rising interest payments.

U.S. policymakers, in particular, see AI as a potential driver to lift post-2008 productivity and free workers for higher-value tasks. Yet experts warn that even a strong AI-driven growth surge would not fully offset the structural pressures on public finances.

AI’s Potential Impact on Public Debt

The OECD and economists working with Reuters estimate that a productivity boost from AI could lower projected debt in OECD countries by up to 10 percentage points by 2036. That would reduce the expected rise from roughly 150% of GDP to around 140%, still sharply higher than current levels of approximately 110%.

In the U.S., best-case scenarios suggest debt could rise to 120% of GDP over the next decade instead of 100%, with one economist projecting little change. The key variables include whether AI creates more jobs than it displaces, whether firms pass productivity gains to workers via wages, and how governments manage spending.

Demographics and Limits

Demographics remain a central constraint. Ageing populations and entitlements tied to them are the root causes of long-term debt growth. Economists note that even with a productivity surge, labour shortages and slower immigration could offset AI gains. Countries like Italy and Japan may see smaller benefits from AI due to lower adoption rates and smaller sectors that can leverage the technology.

Fiscal Uncertainty

AI could raise government revenues through higher productivity and wages, but the effect is uncertain. If automation primarily benefits profits and capital rather than labour, fiscal gains could be limited. Additionally, public spending may rise alongside growth, dampening potential debt relief. Social security and other entitlement programs, indexed to wages, will continue to pressure budgets regardless of AI-driven efficiency.

Interest rates and debt servicing costs add another layer of uncertainty. Economists warn that recessions or financial shocks could prevent AI-driven productivity gains from providing timely relief.

Analysis

AI offers a potential “breathing room” for overstretched economies, buying time for governments to tackle structural deficits. Even if growth rises to 3% in the U.S. through 2040 above Federal Reserve expectations it will not solve fundamental fiscal challenges.

Economists stress that AI is a supplement, not a replacement, for fiscal reform. Rising productivity may help governments manage debt growth more sustainably, but without structural policy adjustments addressing demographics, entitlement programs, and spending priorities, the debt trajectory remains precarious.

Ultimately, while AI could improve efficiency and output, it is unlikely to carry the heavy lifting required to stabilize public finances on its own.

With information from Reuters.

BUESOS AIRES, Feb. 27 (UPI) — Argentina’s government took a new step in its strategy to meet upcoming dollar-denominated debt maturities without again relying on international markets. In a challenging financial context, President Javier Milei’s administration launched a new U.S. dollar bond aimed at raising up to $2 billion.

The goal is to get ahead of payments scheduled for July, when about $4.2 billion in private loans come due. Instead of seeking funds on Wall Street or using the swap line negotiated with the United States, the Economy Ministry chose to raise those dollars domestically.

The decision comes amid a recent increase in Argentina’s sovereign risk, an indicator that reflects how investors perceive a nation’s ability to repay its debt and that, when it rises, makes external borrowing more expensive.

With that roadmap, the economic team faced the first test of the new instrument on Wednesday. In the initial issuance, it placed $150 million at an annual rate of 5.89%, below what market analysts had estimated.

The response exceeded official expectations. The Finance Secretariat reported receiving bids totaling $868 million, nearly six times the amount ultimately taken by the government. For the government, that level of interest confirms there is demand for Argentine dollar debt even in a volatile environment.

The bond, which can only be subscribed to and paid for in U.S. dollars, will be included in the regular biweekly auctions alongside peso-denominated securities. In each initial auction, up to $150 million will be offered, with the possibility of expanding by another $100 million in a second round the following day, until the planned program is completed.

Identified as BONAR 2027 or AL27 in some markets, the security will mature on Oct. 29, 2027, after Argentina’s 2027 presidential election. It offers a 6% nominal annual rate, with monthly interest payments, and will repay principal in a single installment at maturity.

The initiative comes at a key moment for Argentina, which faces heavy foreign-currency commitments midyear. In that context, securing dollar financing without turning abroad becomes central to organizing the payment schedule and maintaining investor confidence.

Financial adviser Gastón Lentini, founder of consulting firm Doctor de tus Finanzas, told UPI that the dollar bond launched by Argentina has sparked strong interest among local investors.

“Unlike almost any bond issued before, this one pays interest every month,” he said.

In practice, this means that if someone invests $10,000, they will receive $50 each month until October 2027, when the bond matures and the invested principal is returned.

Economist Elena Alonso, co-founder of consultancy Esmerald Capital, noted that anyone can invest in this bond.

“The minimum amount is one dollar. Anyone who has never invested before only needs to open an investment account,” she said.

Lentini explained that in July the government faces a debt payment of about $4.2 billion, which includes interest and principal repayments on certain bonds.

“The limited level of international reserves and restricted access to dollars forces the government to be creative in raising the necessary funds and meeting payments,” he added.

Regarding the decision to finance domestically instead of going to international markets, the specialist said the current sovereign risk level would require Argentina to offer rates above 9% if it turned to foreign investors.

“Taking advantage of the restrictions that still exist on taking foreign currency out of the country, the economy minister is managing to finance with Argentines’ own dollars at a rate close to 6%, which is an achievement for the government,” he said.

On the currency swap line with the United States, Lentini said it will not be necessary. According to him, the combination of agro-industrial exports, oil, gas, minerals and incentives from the RIGI program allows the country to gather enough dollars to meet its obligations.

“The swap line serves as an additional backstop, but the strategy of paying with its own money strengthens investor confidence in respect for contracts,” he added.

Finally, Lentini said it would be positive for sovereign risk to decline to facilitate a debt rollover — a restructuring or refinancing of maturities — though if that does not happen, he does not see a risk of default this year, noting that Argentina is one of the few countries in the world with a surplus.

Alonso agreed that resorting to the swap line will not be necessary, as the country’s dollar reserves are growing. She also noted that, for the first time in years, private debt issuances and repurchase agreements with banks helped cover maturities.

“The swap line with the United States remains available as a backstop, but the government seeks to build credibility by using its own resources first,” she said.

Artificial intelligence could deliver the productivity surge policymakers have been hoping for since the global financial crisis. But even if it does, economists caution that faster growth will not be enough to solve the mounting debt burdens weighing on advanced economies.

Public debt already exceeds 100% of GDP across most rich nations and is projected to rise further as ageing populations strain pension and healthcare systems, interest bills climb and governments ramp up defence and climate spending. Against that backdrop, AI is increasingly being framed as a potential fiscal lifeline.

The reality is more complicated.

Productivity: The “Magic” Ingredient-With Limits

Economists broadly agree that sustained productivity growth can dramatically improve fiscal dynamics. Higher output boosts tax revenues without raising tax rates, makes existing debt easier to service and reassures bond investors worried about long-term solvency.

At the Organisation for Economic Co-operation and Development (OECD), modelling suggests that if AI meaningfully raises labour productivity and if employment also expands public debt across member countries could be about 10 percentage points lower by the mid-2030s than otherwise projected. Even then, debt would still climb to roughly 150% of GDP on current trajectories, up from around 110% today.

In the United States, best-case projections from several economists suggest debt could rise more gradually, to roughly 120% of GDP over the next decade rather than accelerating more sharply. But that still represents historically elevated levels.

As one economist put it, productivity is “like magic” for fiscal sustainability yet today’s debt challenges are too large for productivity gains alone to offset.

Demographics: The Structural Headwind

The fundamental constraint is demographic.

Ageing populations mean fewer workers supporting more retirees, pushing up pension and healthcare costs. In the United States, Social Security alone accounts for roughly one-fifth of federal spending, and benefits are indexed to wages. If AI lifts wages, it may simultaneously increase future benefit obligations.

Slowing immigration in some countries, particularly the U.S., compounds the issue by limiting labour force growth. If AI boosts output per worker but the total number of workers stagnates or declines, overall fiscal relief may be limited.

In short, AI may buy time but it does not reverse the demographic arithmetic driving long-term deficits.

Growth vs. Interest Rates: A Delicate Balance

For debt sustainability, what matters is not just growth, but the relationship between growth and borrowing costs.

If AI-driven productivity pushes economic growth above interest rates for a sustained period, governments can stabilise or even reduce debt ratios more easily. But if faster growth also lifts real interest rates for example, because higher productivity raises returns on capital then debt servicing costs could rise in parallel.

This debate is already unfolding among policymakers at the Federal Reserve, where officials are assessing whether AI could permanently raise the economy’s potential growth rate.

Bond markets will be decisive. Since the pandemic, investors have shown a willingness to punish governments perceived as fiscally profligate. Higher yields can quickly offset any growth dividend from technological gains.

Employment and Wages: The Distribution Question

Much depends on how AI reshapes labour markets.

If AI complements workers and creates new categories of employment, tax revenues may rise meaningfully. But if automation displaces workers faster than new jobs are created, or if profits accrue disproportionately to capital rather than labour, fiscal gains could disappoint.

Capital income is often taxed more lightly than wages. A productivity boom concentrated in corporate profits rather than payrolls may widen inequality without generating proportionate public revenue.

On the spending side, governments might benefit from efficiency gains in public administration. Yet history suggests higher growth can also lead to higher spending demands from infrastructure upgrades to social transfers.

No Substitute for Fiscal Reform

Even in optimistic scenarios where AI lifts U.S. growth closer to 3% annually for an extended period, debt ratios are projected to stabilise at elevated levels rather than return to pre-crisis norms.

In pessimistic scenarios where AI disappoints or a recession strikes before productivity gains materialise debt trajectories could worsen significantly, potentially reaching levels that trigger market instability.

The consensus among economists is clear: AI can ease fiscal pressure, but it cannot substitute for structural reforms. Addressing entitlement sustainability, improving tax efficiency and managing spending priorities remain central.

A Race Against Time

There is also a sequencing risk. If financial markets grow nervous about fiscal trajectories before AI-driven gains are realised, borrowing costs could spike. In that case, the productivity dividend may arrive too late to calm bond investors.

Technological revolutions historically take time to diffuse across economies. Infrastructure, regulation, workforce training and corporate adoption all shape how quickly productivity benefits materialise.

For debt-laden economies, the gamble is that AI’s boost will be large, broad-based and timely. That is possible but far from guaranteed.

AI may help governments breathe easier. It will not absolve them of the harder political choices required to put public finances on a sustainable path.

With information from Reuters.

With that, the legacy debt from the Glazer family takeover and additional ‘liabilities’ listed of more than £500m – the vast majority of which is outstanding transfer fee payments – the club owed a staggering £1.29bn at the end of last year.

United also paid out £13.9m in net finance costs, although this was much lower than the £37.6m from the previous year.

In August 2025 respected football finance blogger Swiss Ramble placed Everton and Tottenham above Manchester United in his debt league. However, both clubs have borrowed to pay for new stadiums.

United are yet to say how they intend to finance their new ground, which is likely to cost more than £2bn, although the figures show why the club are so keen to return to the Champions League after a two-year absence.

Total revenues for the period in question were £190.3m, with commercial revenue dropping 8% from the previous 12 months to £78.5m. However, wages also fell by 9% to £75.1m.

Since taking a 29% stake in the club two years ago, Sir Jim Ratcliffe has instigated major cost-cutting, including two rounds of redundancies that have cut 450 jobs.

In addition, many staff perks, including a paid-for staff canteen, have been axed.

United sources argue this has allowed more to be invested on the data side of the club.

There was no mention in the financial statement about the amount United paid to sack head coach Ruben Amorim as this took place after the reporting period.

“We are now seeing the positive financial impact of our off-pitch transformation materialise both in our costs and profitability,” said Berrada.

“We continue to take a football-first approach and today’s results demonstrate the underlying strength of our business as we continue to push for the best football results possible for our men’s and women’s teams.”

Feb. 24 (Asia Today) — Average household debt per borrower in South Korea rose to a record 97.39 million won ($73,000) at the end of last year, as mortgage lending expanded amid rising home prices, according to data released Monday by the Bank of Korea.

The figure marked the first time per-borrower debt has exceeded 97 million won, up 2.24 million won ($1,680) from a year earlier. Total household loan balances reached about 1,853 trillion won ($1.39 trillion), an increase of 51 trillion won ($38.3 billion) from the previous year.

The central bank said the average rose as overall loan balances increased while the number of borrowers declined slightly, pointing to a growing concentration of debt.

Mortgage loans accounted for much of the increase, particularly among borrowers in their 20s to 40s. The average mortgage balance for borrowers in their 30s climbed to 225.41 million won ($169,000), the highest among age groups.

Loans were concentrated in the Seoul metropolitan area, where home prices continued to rise. According to the Korea Real Estate Board, apartment prices in Seoul increased 13.5% last year, the steepest gain since 2021.

Despite a slowdown in new lending following the government’s Oct. 15 real estate measures, authorities are moving to tighten controls further as household debt approaches 2,000 trillion won ($1.5 trillion), a level widely viewed as a risk to economic stability.

The Financial Services Commission has said it will set a lower annual loan growth target than last year’s 1.8% and is considering imposing separate caps on mortgage lending, the core component of total loan management.

Regulators are also reviewing a plan to raise risk-weighted asset ratios on mortgage loans from 20% to 25%, a move that would effectively make banks more cautious in extending housing credit.

Major commercial banks have already begun reducing household loan balances in line with regulatory guidance. As of Sunday, the combined household loan balance of the five largest banks stood at 765.6 trillion won ($574 billion), down about 200 billion won ($150 million) from the end of January.

— Reported by Asia Today; translated by UPI

© Asia Today. Unauthorized reproduction or redistribution prohibited.

Original Korean report: https://www.asiatoday.co.kr/kn/view.php?key=20260224010007193