All the zombie institutions that survived because of negative interest rates, quantitative easing and credit easing now face rising debt servicing ratios.

Judge as of 2023-01-03. The claim has two parts: (a) heavily indebted 'zombie' firms or institutions that survived on ultra-low or negative rates, QE and credit easing existed in material numbers; and (b) at that date they faced rising debt-servicing burdens (interest-coverage or debt-service ratios getting worse) because rates were rising. True: data or analysis from around late 2022 to early 2023 (e.g. BIS, IMF, central bank financial stability reports, rating agencies) shows both a material zombie-firm population tied to the easy-money era and rising interest costs or debt-service ratios for those firms, actual or projected as debt reprices. Mostly true: both parts hold broadly, but the rise in servicing burdens was mostly projected, or confined to some regions or sectors, rather than already widespread. Mixed: one part is well supported and the other is weak, e.g. zombies existed but their servicing ratios had not yet risen. Mostly false: there is evidence of zombies, but servicing ratios were flat or falling (e.g. because of long fixed-rate terms) and the claim overstates it. False: evidence shows no meaningful zombie population, or that debt-service burdens for such firms were clearly not rising.

Set before the research began.

1. E1 The rise of zombie firms: causes and consequences | Bank for International Settlements Bank for International Settlements · 23 September 2018

   “Across 14 advanced economies, their share rose, on average, from around 2% in the late 1980s to some 12% in 2016 under the broad definition”

2. E2 fpc-summary-and-record-october-2022.pdf Bank of England, Financial Policy Committee · 12 October 2022

   “share of mid to large-cap companies with Interest Coverage Ratios (ICRs) below 2.5 – a threshold below which staff estimated that failure becomes more likely – might rise from 36% at the end of 2021 to 45% at the end of 2022.”

3. E3 Financial Stability Report - December 2022 Bank of England · 13 December 2022

   “The share of corporates with low ICRs is expected to increase further into 2023, as credit conditions remain tight, input costs rise, and demand falls. Earnings and interest rate paths consistent with the November 2022 MPR imply that the debt-weighted share of corporates with ICRs below 2.5 could rise from 30% in 2022 to around 40% in 2023.”

4. E4 fpc-summary-and-record-october-2022.pdf Bank of England, Financial Policy Committee · 12 October 2022

   “Larger companies have a relatively large share of fixed-rate debt and this will insulate them to some extent from the immediate effects of rising interest rates.”

E1 (BIS) shows a material zombie-firm population: about 12% of firms across 14 advanced economies in 2016 under the broad definition. The quote does not explicitly tie this population to QE or credit easing, and the data is older than the judgment date. For rising servicing burdens, the Bank of England's October and December 2022 publications (E2, E3) project that the share of UK companies with interest coverage ratios below 2.5 could rise, from 36% at the end of 2021 to 45% at the end of 2022 for mid to large-cap companies (E2), and from 30% in 2022 to around 40% in 2023 on a debt-weighted basis (E3), with E3's projection based on interest rate paths consistent with the November 2022 Monetary Policy Report. That evidence is mostly projected, limited to the UK, and covers corporates in general rather than zombies specifically, and E4 notes that fixed-rate debt partly shields larger firms. Both parts hold broadly, but the rise in servicing burdens is mainly projected and regional, which fits the criteria for mostly true.