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24 Oct, 2022 16:12

Top German companies hit historic debt highs – Handelsblatt

Borrowing and arrears have ballooned to €533 billion in one year, the outlet reports
Top German companies hit historic debt highs – Handelsblatt

The net financial debt of 150 of Germany’s largest listed companies reached its highest level ever this year, Handelsblatt newspaper reported on Sunday.

The outlet said that in just one year, the debt of major corporations (excluding banks and insurance companies) soared by 20%, to €533 billion ($526 billion). Twenty-five German companies currently have more debt than equity, the report noted, adding that to reduce debt, many of them are planning to sell their shares.

Also, the interest rate turnaround by central banks is causing the costs for new loans to rise drastically. Handelsblatt cited Bundesbank statistics that corporate bonds are currently yielding an average annual interest rate of 4.3%. Just over a year ago it was 0.7%. “The trend has recently accelerated because investors expect rapidly rising interest rates in view of double-digit inflation rates,” it wrote.

The report highlighted that telecommunications giant Deutsche Telekom, which is included in the DAX index, has the largest net debt among German companies, estimated at €145.8 billion.

On Sunday, Saxony’s state premier, Michael Kretschmer, warned that German companies are currently struggling to survive amid the skyrocketing energy costs. According to the official, many companies are ready to stop their work within a few weeks, not months.

The day before, Deutsche Presse-Agentur reported, citing a statement by the president of the Association of German Chambers of Commerce and Industry, Peter Adrian, that some enterprises in Germany may suspend operations as the energy crisis worsens.

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