Loans to companies for an amount exceeding one million euros exceeded a weighted average of 4% in April for the first time in fifteen years, according to data from the Bank of Spain. They went from 3.94% in March to 4.15% a month later, which puts pressure on companies’ financing plans.
The current levels are due to the increases in interest rates by the ECB and are more than three points above those registered a year ago, when companies were financed at 0.92%. In credits up to 250,000 euros, the cost of debt is already 4.49%, while in those between 250,000 euros and one million euros they amount to 4.2%.
This increase in the cost of debt is forcing companies to change their strategy, whether it is resorting to non-bank financing, containing investments or carrying out divestments. In the first quarter, according to the IGM firm, the Credit Suisse crisis substantially reduced the bond issues with which large companies finance themselves in the markets.
Among the large groups, companies such as Amadeus, OHLA or Cepsa have anticipated interest rate rises by repurchasing debt, while others, especially construction companies such as Sacyr or ACS, have reduced or are reducing liabilities thanks to divestments.
Data from the Bank of Spain also show that in April the volume of bank loans granted to companies in operations of more than one million euros stood at 11,957 million euros, a figure somewhat higher than that of January and February, but by below the average of recent years.
The body led by Pablo Hernández de Cos calculates that around 53% of companies have bank loans and expects that the proportion of those that suffer from a high financial burden will pass during the current cycle of interest rate rises of 11.5%. to about 20%.
“The increase in interest rates is gradually raising the cost of bank financing for indebted companies”, which has contributed to the “loss of strength” of productive investment, he says.
Among the financing alternatives that companies resort to are loans from the EIB and the option of participating in projects supported by European funds. The Government must send to Brussels before the end of July the final approach to receive the nearly 84,000 million additional euros in Community loans.
Among small and medium-sized companies, Cepyme has been warning of the increase in financial pressure and of some changes in the treasury management guidelines of these companies. The current inflation scenario, he indicates, has forced many companies to demand the collection of invoices beforehand.
In its latest quarterly report on loans, the ECB reported that the banks acknowledge that they have tightened the granting of credit to companies above forecasts until March and that they will continue to do so in the coming months.
