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Companies are back in debt for the first time since 2010

The debt rises by 9 billion euros but falls relative to GDP to 78% for the growth of the economy

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Companies are back in debt for the first time since 2010

According to supervisor's figures, non-financial companies cut ir debt over GDP by 5 points during 2017. Compared to maximum recorded in 2010, debt falls by 39 points to 78% of GDP. These callable liabilities are comprised of bank credit and debt securities. The loans granted by national entities continued to decline very slightly, so it was emissions of securities and foreign loans that made balance of debt in euros throw that upturn of 0.8% of GDP.

Companies not only increased foreign funding last year. They also raised ir own resources by 3.2%. In part this is due to revaluation of portfolios due to good evolution of financial markets. But it can also blame to a large extent increase in business margins, of which an important part has been earmarked to reinforce financial situation. The Bank of Spain had already pointed out in its annual report that business margins had remained stable during recovery without hardly contributing to gains in competitiveness. In supervisor's view, this was a normal event when firms faced a context of financial restraint as happened during crisis. However, in opinion of bank, it reveals lack of competition now that re is a recovery and, in principle, new competitors should enter.

INE data show that non-financial companies obtained in 2017 about 89 billion more in rents than in 2008. With se higher incomes, companies have almost recovered investment levels; They allocate 15 billion more to dividends and, above all, have healthy ir accounts, lowering debt and increasing ir capital. At same time, y spend about 10 billion less on wages.

More information
  • Families stop reducing debts and re-claim funding
  • The Bank of Spain says that companies have adjusted salaries but not ir margins
  • The Bank of Spain warns of risk in consumer credit
  • Companies devote less to salaries and more to dividend than before crisis

In addition, in 2017 financing capacity of companies was very high, reaching 34,238,000,000. That is: y generated more resources than ones y used. Even if debt has risen, companies ' assets have grown fatter thanks to this high funding capacity. And after nine years of accumulating positive funding capacity, companies present a much more sound situation with more capital and more own funds.

As for families, ir bank debt fell by 2017 in three points to 61% of GDP, about 24 points below maximum level of 2010. "As in previous years, re was a decline in loans for housing acquisition, which was partially offset by increase in consumer loans and or purposes," says Bank of Spain report, entitled Evolution of Flows and Financial balances of households and non-financial companies in 2017.

That is, mortgage repayments continue to surpass hirings and causing total debt to go down. While this process of dedebtedness of families seems to be losing strength. According to INE data, in 2017 households spent more resources than those generated for first time in nearly a decade. Only 3.063 billion, an amount still reduced. But that does not mean that in order to finance it y have to pull only debt. They also resorted to ir saved deposits and assets. Thus, net household debt did not increase by 2017. Though for very little.

In 2017, gross financial wealth of families rose by 2.1%, a rate slightly higher than that of previous year. The company grew by 2.5% compared to 4.5% of previous year. "During 2017, most households ' investment was materialized in investment funds, followed by acquisition of pension and insurance plans and bank deposits, while direct holdings of securities were reduced. On or hand, in case of companies, investment was refocused mainly on stocks and or shares and, to a lesser extent, on deposits ", reads document of Bank of Spain.

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