How Aston Martin Outran a Billion-Dollar Debt Time Bomb

In mid-February, some investors started their day snapping up the shares of Aston Martin. It wasn’t some turnaround in its consistently loss-making operations that they were cheerful about but confirmation that James Bond’s favorite carmaker was negotiating with bankers to address its debt. For a while, the British firm — and other junk-rated companies around the globe that borrowed when money was cheap — had seemed destined to hit a so-called maturity wall, an event that would drive up its interest costs to the point where they could endanger its existence. Instead, it managed to steer clear as red hot demand for corporate bonds is making this wall crumble. Similar maneuvers by its peers are easing worries in many parts of the credit markets.

When most corporate bonds are due, they aren’t simply paid off but are rolled over — that is, the company borrows new money to satisfy the old debt. That’s a problem when interest rates are higher than when the company originally borrowed. It’s especially a problem if many bonds come due the same year. That’s what the term “wall of maturity” refers to — the potentially damaging need to refinance large amounts of debt at higher costs all at once.