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Rollover Risk
Companies, banks and some governments too can face rollover risk (a.k.a. refinancing risk) when existing debt lines come up for redemption. In the global loan and bond markets, companies invariably raise new debt to pay off old debt rather than deleveraging; and don’t always have cash on hand to repay debt outright. Companies unable to roll over debt as it matures, due, say, to changes in market sentiment or market conditions, or to specific issues related to the company itself (such as a material decline in collateral values for secured facilities or if they push up against debt covenants), can cause a death spiral of lack of access to capital markets, declining confidence, ultimately ending in insolvency.