Tuesday, January 19, 2021

"Europe's Firms Face $720 Billion Capital Gap To Fund Recovery"

And I know just the folks to help them fill that hole.

 From Bloomberg, January 19:

The European Union needs to find new ways to recapitalize businesses so that the hole on corporate balance sheets doesn’t derail the recovery, according to a financial-industry group.

Companies face an equity shortfall of as much as 600 billion euros ($724 billion), as existing government programs and private funding won’t suffice to fully cover the roughly 1 trillion euros that businesses need to replace losses suffered during coronavirus restrictions, the Association for Financial Markets in Europe said in a report on Tuesday.

Authorities including the European Central Bank and the European Commission have warned about corporate vulnerabilities after businesses were driven to bank loans and bond issuances to survive. Industry groups have called on politicians to help viable firms clean up their balance sheets to enable future investments.

“Until now government subsidies, debt issuance and bank lending have kept many EU businesses afloat, but public funding and debt alone cannot be solely relied upon going forward,” AFME Chief Executive Officer Adam Farkas said in the report. “For European businesses to recover from the economic crisis, alternative types and sources of funding will be required to help mitigate their mounting debt burden.”...