Corporate debt reaches a new record high: demand now exceeds €50 billion

Corporate credit demand has broken the downward trend seen in the last two months and, in June -the latest data available-, the granting of commercial loans exceeded €50 billion, as detailed in the latest report on nonperforming loans (NPL) and credit from the Bank of Spain. The latest metrics published by the national supervisor show that companies continue to increase their indebtedness in order to obtain capital to be able to manoeuvre and undertake new operations. 

Despite the fact that the Spanish economy, like the rest of the European economies, is in a period of monetary tightening, companies continue to demand loans to stay the course and meet operations. It is worth noting that so far this year, the European Central Bank has raised interest rates five times in a row. 

Commercial loans granted exceed €51.7 billion 

As detailed in the latest report on delinquency and credit published by the Bank of Spain, the demand for commercial loans grew by more than 4.5% in June compared to January. Thus, the volume of loans granted amounted to €51.746 b. Banks closed the first half of the year with a growing demand for credit from companies and for consumer loans.

In fact, the volume of consumer credit, in addition to breaking the downward trend seen in April and May, is the highest so far this year. Although banks have tightened lending conditions due to interest rate hikes, commercial credit continues to grow and, up to June, the capital loaned exceeded €51.7 billion.

While it is true that commercial loans have somewhat looser conditions than the rest of the assets, the interest rate hikes have been applied to all loans in the same way, which means that they have also become more expensive. Even so, the volume of capital lent grew by more than €4 billion month-on-month in June.

Original Story: Economia Digital |Alejandro Montoro 
Photo: Photo by Jason Hochman from FreeImages
Edition and translation: Prime Yield