Top German Companies Hit Historic Debt Highs

The net financial debt of 150 of Germany’s largest listed companies reached its highest level ever this year, Handelsblatt newspaper reported on Sunday.

The outlet said that in just one year, the debt of major corporations (excluding banks and insurance companies) soared by 20%, to €533 billion ($526 billion). Twenty-five German companies currently have more debt than equity, the report noted, adding that to reduce debt, many of them are planning to sell their shares.

Also, the interest rate turnaround by central banks is causing the costs for new loans to rise drastically.

Handelsblatt cited Bundesbank statistics that corporate bonds are currently yielding an average annual interest rate of 4.3%. Just over a year ago it was 0.7%. “The trend has recently accelerated because investors expect rapidly rising interest rates in view of double-digit inflation rates”, it wrote.