45.6% of Eurozone’s corporate debt is BBB

Debt defaltion copia

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%.

About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.