Corporate debt is like coffee for an office worker: in moderate doses it energizes and boosts productivity, but in excess it turns life into a thriller with a racing heart and the risk of a heart attack. The key thesis running through the entire history of corporate finance is this: debt is a critically important tool for growth, but its uncontrolled accumulation is a direct path to financial instability and the loss of control over one's own future.
When Credit Is a Friend
Debt helps businesses grow, and this is not just a figure of speech. Interest on loans and bonds is deductible from the tax base, creating what's known as a tax shield—the value of a company with borrowed capital ends up higher than without it. Add to this the effect of financial leverage: if a company earns more on borrowed money than it pays for the use of that money, return on equity soars. In favorable times, debt allows companies to scale, acquire competitors, invest in development, and do everything that would be unavailable with equity capital alone. The cost of debt is usually lower than the cost of equity capital, so the weighted average cost of capital (WACC) decreases with a reasonable share of borrowed funds. The main condition is a stable or growing business with predictable cash flows. Where there is confidence in tomorrow's revenue, debt works as an accelerator.
When Debt Becomes an Enemy
Now let's flip the coin. Debt starts working against shareholders when the cost of servicing it exceeds the benefit it brings. In this case, the effect of financial leverage becomes negative: earnings per share fall faster than revenue, and any downturn in the business turns into a liquidity crisis. Tellingly, in 2025, according to the Bank of Russia, the debt burden of most major companies increased: the aggregate Net Debt/EBITDA indicator reached 2.2, up by 0.4 points. Total corporate debt in Russia at the end of the year amounted to 274.7 trillion rubles. And these aren't just numbers—behind them are companies balancing on the edge.
Figures That Are Unsettling
Regulators are sounding the alarm for good reason. In its Financial Stability Review, the Central Bank named credit risks in the corporate sector as one of the key vulnerabilities of the economy . According to the regulator's estimates, in the first half of 2025, 67% of corporate debt belonged to companies with an interest coverage ratio (ICR) below 3—already a zone of high credit risk. The forecast for 2026 is even bleaker: the Central Bank expects the share of such debt to rise to 90.9%. In other words, almost all of big business risks finding itself in a situation where the slightest deterioration in conditions would make debt servicing unbearable.
The bond market is also sending signals. In 2025, 36 issuers defaulted, 28 of them for the first time. The total volume of distressed obligations amounted to 55 billion rubles, twice as much as the year before. Analysts at ACRA counted 23 defaulting companies—3.2% of the total number of issuers, a notable increase compared to ten cases the year before. Notably, the main problems occurred in construction, real estate, finance, and wholesale trade. High interest rates and reduced available liquidity became a critical factor: even moderate rate pressure was enough to trigger defaults on obligations.
Why Companies Don't Stop
The main question is why, given all these risks, companies keep piling on debt. The answer is cynical and simple: in the short term, debt provides resources that competitors don't have. In conditions of fierce competition, giving up borrowed funds means voluntarily surrendering one's position. In addition, management is often tied to bonuses for growth rather than for stability. Add to this the illusion that "this time will be different"—the market won't collapse, rates won't rise, customers won't leave. But reality, as always, makes its corrections. And then companies find themselves in a trap: refinancing old debt with new debt becomes increasingly difficult, creditors tighten covenants, and the cost of new debt rises. The life preserver turns into concrete boots.
What Lies Ahead
And now for the most interesting part. In 2026, corporations will need to repay bonds and digital financial assets worth about 4.9 trillion rubles—40% more than the year before. And that's without counting put options. A significant portion of this sum—1.8 trillion rubles—falls in December. The question is not whether there will be new defaults, but how many there will be and whom they will affect. ACRA maintains negative expectations, drawing attention to the growing share of credit rating downgrades. Particularly vulnerable are third-tier companies, the coal sector, construction firms, and small leasing companies. At the same time, about two-thirds of companies' credit portfolios are issued at floating rates, so even a small change in the key rate immediately affects interest expenses. On the other hand, the gradual decline in the rate from a peak of 21% to 14% provides some relief. But relief is not a cure. Companies that have gotten hooked on the debt needle will either have to revise their business models or prepare to meet a bankruptcy administrator. Debt is neither evil nor good. It is a tool. And like any tool, it requires skilled hands and a sense of proportion. The rest is a matter of time and interest rates.
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