S&P says European companies face $1.5 trillion funding shortfall next year
Companies in Western Europe face a likely funding shortfall of $1.5 trillion (£900bn) next year as central banks withdraw emergency stimulus, and spendthrift governments across the world soak up much of the available capital, according to calculations by Standard & Poor's.
"This is definitely a threat on the horizon," said Blaise Ganguin, the agency's European credit chief.
Some 75 companies large enough to be rated face likely default in 2010 as the slow-burn effects of the crisis hit home. The default rate peaked near 13pc this year, the highest since S&P began to collect data.
The shortage of funds will raise borrowing costs for business by an extra 75 basis points, with the risk of a more serious crunch for small companies. "While the worst of the recession may be behind us, the recovery is likely to be extremely shallow," he said.
Mr Ganguin said capital spending in vulnerable sectors such as automobiles, home furnishing, and forestry may fall by as much as 50pc as they struggle to cope with excess capacity. "These are enormous numbers. It is clearly going to put a dampener on the recovery," he said. FULL ARTICLE
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