Half of the companies in Spain will close the year in losses and with liquidity problems and many are in debt due to ICO loans and other bank loans, with a majority of their workforce in ERTE and without activity due to the pandemic.Logically, both business creation and capital increases have dropped.
The major North American rating agencies, Moody’s and S&P, forecast that the number of companies that will incur defaults will increase this year to levels not seen since the financial crisis.
Defaults and debt restructurings are likely to increase substantially in 2021 to levels not seen since 2009, ″ warns S&P in its latest report for investors, in which it forecasts that the default rate in Europe will double to 8% this year, from the 4.3% level it is currently at.In his opinion, although public sector measures to protect income and sustain the productive fabric are important, they will not be enough to prevent the disappearance of some companies, and the same will happen with the accommodative policy of central banks.
The corporate default rate will double in Europe to 8% this year, from its current 4.3% levelIn his opinion, although public sector measures to protect income and sustain the productive fabric are important, they will not be enough to prevent the disappearance of some companies, and the same will happen with the accommodative policy of central banks.In addition, government support measures will not be able to "prevent the insolvency or forced restructuring of companies with vulnerable capital structures or those most affected by the restrictions derived from covid-19."
The latter are those that belong to sectors such as transport, leisure and entertainment, commerce and hospitality, as well as energy, especially in the United States.Also influencing the poor prospects is the fact that the volume of global debt is so high, equivalent to 265% of world GDP at the end of 2020. This rate should begin to decline progressively as of this year as GDP (the denominator) regrow.Faced with this situation, we can only wait for the effects of the vaccine to make the economy go up last and spring. Meanwhile, we must try to control delinquency, not assuming or deferring debts beyond what is strictly necessary.
ALBERTO PEÑA TORRECILLA