German companies finance themselves through bonds strengthened. Analysts at Moody’s expect this year new papers of more than 100 billion euros.
The German companies take fewer loans from banks. Instead, they finance themselves increasingly independent of bonds in the capital market. This is the result of a published study on Tuesday the rating agency Moody’s to finance German enterprises. In the current year, the credit examiners expect a record number of emissions. The new bonds could first cross the threshold of 100 billion euros. The trend is set to continue from previous years, according to the Moody’s analysts.
Financing through syndicated loans where several banks provide a loan to the company will continue to decline. Last year, the loans have declined by 7 percent to 124 billion euros, while there were 81 billion euros 3 percent fewer new bonds. However, that Germany was the European country with the newest issues of corporate bonds. Behind it followed France with 80 billion euros, which corresponds to an increase over 2015 of about one fifth. In third place, Britain was almost level with also some 80 billion euros. The increase amounted to 1.6 percent.
That German companies issued more bonds this year, likely in the opinion of Moody’s, especially in the chemical and pharmaceutical group Bayer lie. Leverkusen should fund a significant portion of the bridge loan of 57 billion dollars which is used to finance the acquisition of the US seed company Monsanto, on the bond market. In addition, the environment for bond financing remains good, write the Moody’s analysts.
For one, they expect continued low-interest rates in the euro area, on the other hand, creates European Central Bank (ECB) with their purchases favorable conditions for bond issues. Because their demand pushes up prices, thereby reducing yields. Since June 8, 2016, the ECB has bought a total of 61 billion euros in corporate bonds, as evidenced by an announcement by the central bank on Monday. Of this amount, as calculated by the DZ Bank analyst Peter Droste almost 30 percent to French corporate bonds.
The title of German companies accounted for about 24 percent. In third place, Italian corporate bonds are at just 13 percent, behind Spain with just under 10 percent. In January, the ECB has acquired corporate bonds for 8.4 billion euros. Last year it had invested a total of EUR 51 billion in this asset class. The monthly figure was 7.3 billion euros. This is also why depressed because in June 2016 all the trading week for the purchases is missing.
Risk premiums on government bonds could go up
The Moody’s analysts expect this year especially the chemical companies and automobile manufacturers, many bonds are issued. Last year, most bonds of Daimler came with an issue volume of 19 billion euros. Behind BMW at just under 14 billion euros. This year, the Moody’s analysts expect high resource requirements of Volkswagen, because the effort to settle the litigation has to be financed in the diesel scandal.
The car companies go relatively many short-term bonds with maturities between one and three years. This is due to the sales financing banks operating that prefer shorter maturities. The high resource requirements in the chemical industry justify the analysts with Monsanto’s acquisition of Bayer. Total loans and credits German companies about 110 billion euros are due, according to Moody’s this year.
Bonds: Growing yield differentials in the euro area
Headwinds for corporate bonds expected Alasdair Ross, investment strategist for this area of investment company Columbia Threadneedle. The populist policies will be a major issue in the markets for corporate bonds in the year 2017th Although Ross continues to expect positive returns for corporate bonds. But they would be lower than last year.
At that time, the yield for corporate bonds totaled from the good credit rating grades (investment grade) around the world to 4.7 percent. He did not rule out that the risk premiums on government bonds gave the political risks could clearly go up. Recovering economy and inflation, coupled with fiscal incentives, made other asset classes such as stocks more attractive, the expert from Columbia Threadneedle writes.