Despite Government Efforts, Large Companies Say Credit Remains Scarce

As the US government prepares to implement the latest phase of its bank rescue plan, research from Greenwich Associates has revealed that large companies around the world see previous efforts by national governments to restore the flow of credit as having only limited success.

Of the 599 large companies in North America, Europe and Asia surveyed from 28 January – 3 February, 2009, only 30% say it has become easier to secure credit in the three months since governments in the US, the UK and other countries first announced their plans to shore up the banking sector and revive global credit markets. However, more than a quarter of the companies say credit has become more difficult to obtain over the period, and 44% say there has been no change. Results differ dramatically by region, with companies in the US much more likely to report an improvement in credit conditions than their counterparts in Europe:

  • In the US, 35% of companies say credit has become more available since October 2008. Across all of Europe, however, only 22% of companies report that credit conditions have improved, including just 14% of companies in the UK.
  • In Europe, nearly a third of companies say their access to credit has become more limited over the past three months, including 38% of companies in Germany. A quarter of US companies say credit has become more difficult to obtain.
  • In Asia, where until recently banks had not been hit as hard as those in other regions, 40% of companies say their access to credit has improved since October and only 16% say it has worsened.
  • The situation is similar in Canada, where 43% of companies say credit has become easier to obtain over the past three months and only 19% say conditions have deteriorated.

Where conditions have improved since the start of government rescue efforts, credit has begun flowing mainly to companies with investment-grade credit ratings. Around the world, 43% of investment-grade companies say credit access has improved since October, compared with only 13% of companies with credit ratings of BB or below and 26% of companies without credit ratings. More than 40% of companies with below-investment grade credit ratings say their access to credit has been further curtailed over the past three months, as do 23% of investment-grade companies and 27% of un-rated companies.


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