Trade credit insurance alert Europe and US
by Gill Montia
Story link: Trade credit insurance alert Europe and US
Coface has noted a deterioration in the average strength of companies in Europe and the US and has placed on “negative watch”, or removed “positive watch” from, eight developed countries.
According to the trade credit insurer, the crisis in confidence responsible for recent volatility in the financial markets has begun its spread to the real economy.
The ups and downs of the eurozone crisis and the US economic policy impasse could therefore lead to consumers and investors suspending their purchases.
Added to which, distrust towards banks, given their exposure to sovereign risk, could affect access to credit for European companies.
In the first half of 2011, credit contracted in Greece, Spain, Portugal and in Ireland.
However, a major risk flagged up by Coface is that credit may soon become rarer and more expensive at the very heart of the EU.
The firm has therefore removed the “positive watch” on the A2 risk assessments for Germany, Austria, Belgium, France and the Netherlands.
The A3 risk assessments for Italy and A4 for Portugal have been put under “negative watch” and Coface has amended the risk assessment for Greece by one notch to C and for Cyprus to B.
The “positive watch” placed on the A2 of the United States has also been erased.
The firm’s chief economist, Yves Zlotowski, comments: “The negative changes of country risk assessments confirm that we have left the phase of global improvement in payment behaviour of companies observed since the second half of 2009.”