Survey Shows European Companies Getting Credit to Fund Operations

Although all signs point to recession in Europe, a new Greenwich Market Pulse shows that most companies in the UK and on the European mainland currently are able to obtain the credit they need to finance their operations. Access to bank financing, while certainly constrained, appears to be less severely restricted in Europe than in the US.

The study results suggest that historic actions on the part of national governments and central banks around the world to inject liquidity into financial markets and restore the flow of credit are beginning to have their desired effect in terms of preserving companies’ access to funding. Seventy per cent of European companies questioned said their positioning relative to working capital financing was ‘excellent’ or ‘above average’, with less than 5% describing their positions as ‘below average’ or ‘poor’. Fifty-six per cent of companies say their companies are in an excellent or above average position when it comes to financing revenue growth, with 13% describing their funding status as below average or poor in these terms. To finance ongoing operations, 42% of European companies say they are currently drawing down on their bank credit facilities and revolvers and another 13% say they are drawing down cash reserves.

In contrast, one-half of the approximately 300 US companies surveyed by Greenwich Associates said their access to funding for ongoing operations had been significantly reduced. US companies were also much more likely than European corporates to say their access to hedging products had diminished as a result of the crisis.


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