Firms across Europe face €88bn in Covid-19 debt wave

Hundreds of high-risk companies in Europe need to repay or refinance nearly €88bn in the coming months, a prospect that becomes more daunting by the day amid the relentless collapse in credit markets.

Firms across Europe face €88bn in Covid-19 debt wave

Hundreds of high-risk companies in Europe need to repay or refinance nearly €88bn in the coming months, a prospect that becomes more daunting by the day amid the relentless collapse in credit markets.

From Germany’s Thyssenkrupp to Telecom Italia, around 600 European high-yield and non-rated bond borrowers have €82bn bonds maturing by the end of 2021, a narrow window to get deals done.

With investors running for the hills and the cost of raising funds soaring, that’s a big ask.

As a result some companies are abandoning plans to raise debt on the bond market and exploring alternatives such as direct lending.

One measure of high yield debt risk in Europe jumped to its highest level since 2012.

Jaguar Land Rover, for example, is planning to use its cash reserves to pay its €442m bond due this week.

Commodity trading giant Trafigura might take that path as well with its two bonds amounting to €750m due later this year, according to a spokesperson.

Others, like Codere, are waiting for the storm to pass. The Spanish gaming company -- which has had to close its Italian bingo halls -- has two bonds due in November 2021 worth €800m.

“Our plan is to refinance when a window in the market opens,” a company spokesperson said.

“We are working to be prepared but there is no doubt that the coronavirus and the uncertainty it has created in the market make it hard in the short term.” The firm’s liquidity position is good, the person added.

Some companies took advantage of funding opportunities before the virus struck, like Italian infrastructure company Salini Impregilo, which refinanced its €600m bond due in June 2021 in January before any cases were confirmed in the country.

The new notes due in 2027 have dropped 24 cents on the euro since issuance to 75 cents, according to data compiled by Bloomberg.

Leveraged loans falling due in the coming 18 months are scarce, but printing inks firm Flint does need to tackle a looming maturity.

Lenders agreed to extend its revolver to March 2021 to give it some breathing space, but the company has term loans worth €1.8bn due in September next year.

For firms that need extra liquidity, getting additional leeway from banks to roll over revolvers-draw on revolvers would be an option, as well as selling assets”, said Stephen Caprio, a UBS credit strategist.

    Useful information
  • The HSE have developed an information pack on how to protect yourself and others from coronavirus. Read it here
  • Anyone with symptoms of coronavirus who has been in close contact with a confirmed case in the last 14 days should isolate themselves from other people - this means going into a different, well-ventilated room alone, with a phone; phone their GP, or emergency department - if this is not possible, phone 112 or 999 and in a medical emergency (if you have severe symptoms) phone 112 or 999

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