But that interest rate risk is then present in the financial system and makes banks more vulnerable to an interest rate rise. Chart 10  Corporate debt levels have also risen over the past few years. In terms of financial metrics, enterprises’ debt sustainability still looks to be fairly sound.
For energy-intensive enterprises, the debt overhang ratio is marginally higher and the interest coverage ratio is slightly lower (chart 10). Increased costs will reduce firms’ financial headroom going forward. This could pose a problem for banks, as quite highly leveraged enterprises comprise a relatively high share of the loan portfolios. Losses could therefore increase in the event of adverse developments.