Bond loans: the new business addiction is not without risk !

The strength of European growth and the euphoria of economic agents should not make us forget that running a business means being prepared for any eventuality or change of trend.

 

Adaptability is essential.

We are currently living in a period of disintermediation of business financing. Also, we have been witnessing the replacement of bank credit by financing on the financial markets since the 2008 crisis. The graph below illustrates this perfectly. Indeed, it underlines the banking peak in 2008 and the progressive increase in the use of " credit bonds " since then.

Passif entreprises - article crédits bonds

Financial market volatility

The counterpart to this disintermediation is the volatility of the financial markets. Indeed, the latter are capable of closing abruptly in the event of a " risk off " market sentiment (a volatility visible on the graph below).

spread crédit high yeld zone euro

Thus, reducing this dependence means increasing its self-financing capacity. This is achieved through a precise and dynamic management of its "cash flow". It also offers a clear vision for the top management of the scenarios to be implemented.

This article was written by Stephane Ravel, Equities Manager at Le Conservateur

 

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