Fitch Ratings has stated that, under a stress case of no further market or bank access, its Italian and Spanish portfolios of rated corporates would be facing the heaviest usage of their committed bank funding by end-2013. In addition, the Spanish portfolio, in aggregate, has low levels of cash relative to its aggregate debt maturities, although individual issuer positions vary. Consequently, these two portfolio’s need to access the capital markets and renew existing lines is more important than for other eurozone countries’ corporates.
Using a stress case funding overlay of no further bond issuance and only use of existing bank facilities and forecast internal cash generation, Fitch’s 2011 Liquidity Study highlights that the utility- and energy-heavy portfolios of Italy and Spain are most vulnerable to continued access to the bond market.
Particularly acute for these two countries’ portfolios, the risk of contagion from their respective sovereigns requires investors to continue to differentiate between these corporates and the sovereign’s own credit issues. Access has recently been stronger for corporates than for financial institutions, but peripheral eurozone corporates have not been spared from significant adverse pricing movement, despite the absence of direct state credit linkage in Fitch’s eyes.
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