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Corporate debt restructuring could cause refinancing crisis

Steve Dinneen
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VAST amounts of corporate debt due to be restructured in the summer could cause a refinancing crisis.

The G4 countries of France, Germany, Italy and the UK have almost £350bn of debt that will mature by the end of the year.

AlixPartners looked at debt held by 577 European companies, including 150 in France, 114 in Germany, 53 in Italy and 260 in the UK. It warned the options for rolling over the debt were limited and said the companies could face a cash crisis.

Stefano Aversa, co-president of AlixPartners, said: “Despite significant spread-tightening in the credit markets, there remain only limited options for rolling over this debt. The potential for a very serious cash crunch is knocking on the door of these companies.

“European corporate borrowers could be facing a refinancing crisis of almost £350bn in 2010.

He added: “Despite significant spread-tightening in the credit markets, there remain only limited options for rolling over this debt. Therefore, the potential for a very serious cash crunch is knocking on the door of these companies.

“European banks are still de-leveraging and cannot be expected to be the source of credit that they once were, and thus many corporations will turn to bonds to raise capital, potentially glutting the bond market and compounding the crisis.”