Lenders → business
Cash arrives from a new bond, bank loan or drawn facility.
Financial vulnerability · learning guide
Refinancing and liquidity
Follow a US-scale business debt stock through a funding shock: maturing principal, cash buffers, new loans, interest costs and the investment that gets squeezed.
US-grounded education and conditional simulations. A current calibrated fragility level for this dimension is not yet estimated on ForeGlass.
United States · observed starting scales, conditional stress paths
A maturity wall is a dated demand for cash, not just a large debt total
Companies, households, banks and government have payments due on different dates. Refinancing replaces a maturing claim with new funding. When lenders pull back together, selling assets or cutting investment can spread the squeeze across the economy.
Business → old lenders
Principal must be paid on its contractual due date.
Business → workers / suppliers
Operating cash and investment support jobs and orders.
Liquidity authority → eligible borrowers
A facility can bridge timing; it creates a repayable claim and cannot repair every insolvent balance sheet.
Country, period and measurement
Nonfinancial-business credit
$16,863.763 billionUS, 2019Q4 stock
BIS borrower sector N. An aggregate debt observation supplies scale, not this lesson’s maturity schedule or a list of committed credit lines.Official source ↗What is observed?
The source cards name a country, period, unit and publication. They establish a historical scale; they do not calibrate every interaction in this example.
What is simulated?
The controls and future paths are declared assumptions. A shock window shows when the assumed disturbance acts. It is not a retrospectively identified US recession, forecast date or probability.
What can you decide?
Compare how the same shock changes with a different buffer, funding condition or policy. Use the result to identify the next evidence to collect, not to infer a current national fragility score.
Interactive macro mechanism · no recession probability
Watch pressure accumulate over time
- Q0
Observed debt stock; invented cash buffer and maturity ladder. - Q1–Q4
A fraction of maturing debt cannot be refinanced. Cash runs down and investment is cut. - Q5 onward
Refinancing availability recovers, but overdue principal and higher-rate debt remain.
The four-quarter funding shock leaves $872.3bn of principal unpaid across the twelve-quarter window. A facility supplies cash but creates debt; it does not erase the maturity obligation. Final total debt is $15094.0bn.
Starting business debt and assumed liquidity sources
USD bn · bars share one scale within this panel
Debt comes due even when refinancing stops
USD bn per quarter · conditional path
Shaded: Rollover restriction Q1–Q4; higher rates on new debt persist.
Original principal dueRefinanced principalUnpaid principal this quarter
Read values as a table
| Scenario period | Original principal due (USD bn per quarter) | Refinanced principal (USD bn per quarter) | Unpaid principal this quarter (USD bn per quarter) |
|---|---|---|---|
| Q0 | 0 | 0 | 0 |
| Q1 | 1,405 | 702.7 | 0 |
| Q2 | 1,405 | 702.7 | 140.5 |
| Q3 | 1,405 | 702.7 | 365 |
| Q4 | 1,405 | 702.7 | 366.9 |
| Q5 | 1,405 | 1,405 | 0 |
| Q6 | 1,405 | 1,405 | 0 |
| Q7 | 1,405 | 1,405 | 0 |
| Q8 | 1,405 | 1,405 | 0 |
| Q9 | 1,405 | 1,405 | 0 |
| Q10 | 1,405 | 1,405 | 0 |
| Q11 | 1,405 | 1,405 | 0 |
| Q12 | 1,405 | 1,405 | 0 |
Buffers buy time; accumulated arrears do not disappear
USD bn stock · conditional path
Shaded: Rollover restriction Q1–Q4; higher rates on new debt persist.
Cash bufferAccumulated overdue principal
Read values as a table
| Scenario period | Cash buffer (USD bn stock) | Accumulated overdue principal (USD bn stock) |
|---|---|---|
| Q0 | 674.6 | 0 |
| Q1 | 224.9 | 0 |
| Q2 | 0 | 140.5 |
| Q3 | 0 | 505.4 |
| Q4 | 0 | 872.3 |
| Q5 | 80.9 | 872.3 |
| Q6 | 151.3 | 872.3 |
| Q7 | 211.2 | 872.3 |
| Q8 | 260.5 | 872.3 |
| Q9 | 299.3 | 872.3 |
| Q10 | 327.5 | 872.3 |
| Q11 | 345.2 | 872.3 |
| Q12 | 352.4 | 872.3 |
Refinancing at higher rates changes future cash commitments
USD bn per quarter · conditional path
Shaded: Rollover restriction Q1–Q4; higher rates on new debt persist.
Interest dueInvestment paid
Read values as a table
| Scenario period | Interest due (USD bn per quarter) | Investment paid (USD bn per quarter) |
|---|---|---|
| Q0 | 168.6 | 253 |
| Q1 | 168.6 | 253 |
| Q2 | 168.6 | 0 |
| Q3 | 168.2 | 0 |
| Q4 | 170.1 | 0 |
| Q5 | 172 | 253 |
| Q6 | 182.6 | 253 |
| Q7 | 193.1 | 253 |
| Q8 | 203.6 | 253 |
| Q9 | 214.2 | 253 |
| Q10 | 224.7 | 253 |
| Q11 | 235.3 | 253 |
| Q12 | 245.8 | 253 |
One possible macro transmission: investment cut → fewer supported jobs
index: starting jobs = 100 · conditional path
Shaded: Rollover restriction Q1–Q4; higher rates on new debt persist.
Jobs supported by investment — assumed mapping
Read values as a table
| Scenario period | Jobs supported by investment — assumed mapping (index: starting jobs = 100) |
|---|---|
| Q0 | 100 |
| Q1 | 100 |
| Q2 | 80 |
| Q3 | 80 |
| Q4 | 80 |
| Q5 | 100 |
| Q6 | 100 |
| Q7 | 100 |
| Q8 | 100 |
| Q9 | 100 |
| Q10 | 100 |
| Q11 | 100 |
| Q12 | 100 |
Equations, assumptions and accounting checks
- The only measured scale here is BIS US nonfinancial-business debt at 2019Q4. Its aggregate does not disclose the maturity ladder, lender commitments or currency split used in this lesson.
- Original debt has twelve equal quarterly maturity tranches. Cash starts at 4% of debt. Quarterly operating cash before interest, investment and principal is 3% of initial debt; desired investment is 1.5%. All are authored assumptions.
- Rollover stress lasts Q1–Q4. Original debt carries 4% annual interest. New refinancing carries 4% plus the rate slider. Opening balances determine this quarter’s interest, so new loans affect the next quarter. The facility charges 4%.
- Unpaid principal stays outstanding and overdue; this demonstration does not cure arrears, seize collateral or initiate bankruptcy. Newly refinanced debt/facility maturity lies outside the displayed horizon, and eventual repayment remains due.
- Investment is cut after interest and principal payments. A complete investment stop is mapped to a 20% reduction in the displayed jobs index; that is an assumption, not measured US employment or an estimated recession effect.
- Cash at close = opening cash + operating cash + new debt − paid interest − principal repaid − investment. Debt at close = opening debt + new debt + unpaid interest − principal repaid. A solvent borrower can face a cash shortfall; this lesson does not value its assets.
Cash uses/sources and debt identity (USD bn): 1.82e-12
How this becomes a macroeconomic vulnerability
Read the maturity chart first
The first chart separates principal coming due, the part refinanced and principal left unpaid. A borrower can own valuable long-lived assets yet lack cash on a payment date. By contrast, an insolvent borrower needs a change in losses, income or claims, not simply a later due date.
Why a rate rise is delayed
Only newly refinanced debt receives the new rate in this experiment. Long fixed-rate obligations do not all reset immediately. Opening balances determine interest this quarter; new borrowing affects the next quarter. The interest chart makes that delay visible.
Where the macro effect enters
If many firms preserve debt payments by cancelling investment, suppliers lose orders and future capacity shrinks. Employment can follow. The displayed jobs index is an explicitly assumed sensitivity to investment, not a measured multiplier or a US unemployment forecast. Government cash facilities, lender capital and foreign-currency funding require separate evidence.
Liquidity support has a balance-sheet counterpart
The facility increases borrower cash and debt together. It does not count as earned revenue or remove the original obligation. An undrawn facility is not cash until drawn, and a revocable line may disappear precisely when borrowers need it.
When obligations fall due, which funds are actually available?
Refinancing replaces debt that comes due with new funding. A concentration of maturities creates dependence on cash generation, reserves or lenders at particular dates. If funding becomes unavailable, a borrower may have to use cash, sell assets or renegotiate payments. Funding liquidity means being able to make those payments; market liquidity means being able to sell an asset without a large price concession. Solvency concerns asset values and liabilities, so a solvent borrower can still face a cash shortage.
- Principal comes due on a defined schedule.
- Cash and usable funding may fall short at those dates.
- The borrower needs additional funds, asset sales or changed repayment terms.
Synthetic teaching example · not a forecast
A twelve-month funding gap
An invented company starts with $15m of usable cash and $50m of principal maturing within twelve months. Assume $10m of operating cash is available after all other outflows, including interest and principal outside this maturity amount. A separate $30m committed facility is undrawn at the start. Change maturities, cash or the share of that facility assumed unavailable. The funding reduction is an authored stress assumption, not an automatic property of committed credit.
Available funds = cash + $10m net cash generation + $30m × (1 − funding reduction / 100). Financing gap = max(0, principal due − available funds).
Available funds = $15.0m cash + $10.0m net cash generation + $30.0m × (1 − 25%) committed funding = $47.5m. Financing gap = max(0, $50.0m − $47.5m) = $2.5m. An additional $2.5m would be needed to cover this twelve-month total; payment dates still matter.
Evidence to watch
Keep each observation’s definition, date and reporting frequency. A daily page refresh does not create new daily balance-sheet data.
| Factor | Unit | Frequency / timing | How to read it |
|---|---|---|---|
| Principal due by maturity date | Currency due in each time bucket | Contract dates; maturity schedules updated at reporting dates | A maturity wall is a concentration of repayment dates. Total outstanding debt does not reveal it. Distinguish maturing principal from interest and other scheduled principal already included elsewhere. |
| Unrestricted cash buffer | Currency available now | Daily cash position; periodic reported balance | Count cash the borrower can actually spend. Restricted cash, pledged collateral and cash trapped in another entity may not be usable for these payments. |
| Cash generated and available | Currency over the stated horizon | Cash-flow schedule; monthly or quarterly updates | Use cash remaining after operating costs, tax, investment needs and other payments. Earnings are not identical to cash, and money arriving after a maturity cannot pay it on time. |
| Undrawn committed funding | Currency drawable before payment dates | Facility terms and current draw conditions | Keep this separate from cash already on hand and from hoped-for bond issuance. Availability depends on the contract, covenants, collateral and the lender's ability to perform. |
| Repricing and funding conditions | Rates in percent; available amounts in currency | At resets, refinancing dates and market changes | Refinancing can be possible but more expensive. A loss of funding availability and a higher interest rate are different shocks; this example changes availability only. |
What this example leaves out
- These are invented amounts, not an observed maturity wall, a funding forecast or a default probability. They do not change the Daily Fragility market index.
- A zero twelve-month gap does not prove every payment can be made on time. Real analysis needs the dates, currencies and legal entities of both inflows and outflows.
- Count each outflow once. Here interest and other scheduled payments are already deducted from net cash generation; the principal in the maturity control is excluded from that deduction. Committed funds already drawn into cash must not be counted again.
- This arithmetic omits asset-sale losses, margin calls, deposit withdrawals and feedback between borrowers and lenders. A cash shortage can damage solvency, but the two are not interchangeable.
These mechanisms can overlap. Adding their example outputs does not produce an overall fragility score or a recession probability.
Further mechanism sources
- Federal Reserve Financial Stability Report: funding risks, May 2026
- Office of Financial Research: Short-term Funding Monitor and market dimensions
Observed US starting values and their dates are attributed above. The smaller example uses authored numbers; all stress paths retain their own stated assumptions.
Explore the other dimensions
Return to the vulnerability overview and current market reading →