Further to the different reactions of Portuguese corporates to their sovereign’s plight in the market — courtesy of Fitch, here’s a handy tabulation of corporate liquidity across the periphery:
(Click to enlarge)
Corporates are far from equally exposed to peripheral economies by revenue (Spanish utilities and Latin American operations, for instance — although even then, assets abroad could be non-recourse and illiquid). But there’s an interesting dynamic shared by quite a few of the companies profiled here.
They are refinancing debt — at a fair clip.
According to Fitch:
After the quieter Q210 (when the sovereign contagion issues were coming to the fore), these corporates have continued to access the market at EUR10-15bn per quarter. Corporates have tended to store cash and refinance near-term maturities rather than use the liquidity for share buybacks or acquisitions…
For the capital markets there is great uncertainty on various fronts. How will “crisis resolution” work for sovereign debt post-2013? How will “resolution regimes” for banks affect their lending behaviour and their lending costs in the near- and medium-term?
Consequently, it is not surprising that corporates in all parts of Europe continue to issue debt (albeit at a slower pace than in 2009 and 2010) even as prefunding levels seem entirely adequate for the economic environment.
So despite credit differentials to sovereigns — and varying economic exposure based on corporates’ type of business (see the Fitch chart below) — the connection is still there, it seems.
Related links:
Portugal, a broken debt market – FT Alphaville
Issuance isn’t the eurozone’s big problem – FT Alphaville