Ofelia Marín-Lozano | The exceptionally low interest rate scenario, with short-term rates even in negative territory, are undoubtedly an incentive for major corporate transactions. Being able to get 20-year funding at a fixed annual rate of below 2% is fuelling a slew of M&A deals which, in another scenario, would be prohibitive.
Articles by Ofelia Marín Lozano
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Ofelia Marín-Lozano | In the US stock market, the big companies offer a dividend yield of around 2% and the rate of return on their debt with an average maturity of 5 years is also about 2%. In the European stock market, on the other hand, while the dividend yields of the big companies in the eurozone are at record highs (on average over 4%), what they pay on their debt is at minimum levels.
Ofelia Marín-Lozano | All the banks have seen a sharp decline in their profitability compared with a decade ago. This is partly due to the heavy provisions made to offset the impact of the property crisis (over 300 billion euros in accumulated terms). But it is also the result of the decrease in pre-provisions operating profit and the requirement for the lenders to raise their capital in line with assets.