45.6% of Eurozone’s corporate debt is BBB

There are concerns about debt sustainability in the Eurozone and the valuation of certain assets.

According to ECB data, at the end of 2018, 45.6% of the corporate debt of the euro zone treasured a BBB note against 36.1% with an A rating or higher and 18.3% considered as high yield. This points to the deterioration of the quality of corporate debt in EMU; reality that becomes more shocking when accompanied by absolute figures.

In 2007, BBB corporate debt in the Eurozone stood at € 0.54 trillion compared to € 1.2 trillion in 2018 (explaining the 37.5% rating reduction of its growth) and the high yield went from 0 € 1 trillion to 0.48 trillion in the same period, while rated as A or higher increased by only 35.7%.

Experts at Intermoney commented that this situation increases the eurozone’s exposure to risk, a good example of this being the progress of the weight of the debt without credit rating in the portfolio of investment funds of the Eurozone up to around 15% and that the highly liquid debt has gone from representing about 40% of its portfolio to adding just over 30%.