An economic report published today predicted an increase in the number of loan defaults in Europe during the current year to more than double its level last year, to approach the levels of the Corona virus pandemic.
According to the report of the S&P Global Credit Rating Corporation, it is expected that the percentage of overdue loans for a period of 12 months by last September will reach 3.25% of the total loans in Europe, compared to 1.4% during the same period last year.
Experts also expect an increase in the loan default rate to 4.5% during the current year compared to 1.3% last year, and an increase in the rate of default on high-yield bonds in Europe to 2.5% compared to 0.7% during the same period.
Loan defaults are expected to increase as companies in Europe suffer from many challenges, including the energy crisis, rising raw material prices, and shrinking consumer purchasing power with record high inflation, according to Bloomberg.
At the same time, the cost of refinancing existing loans has become higher after the trend of central banks in the world to increase interest rates in large proportions to curb inflation during the past year.
The agency quoted Fitch Ratings analysts as saying in a report published last month that the limited refinancing alternatives for an increasing number of debtors, with the high proportion of debts with maturities ranging between 2023 and 2025, will contribute to the high rates of default on debt payments in Europe in 2023 and 2024. .