Lower cost of non-financial corporations market financing continued in July
In July, the decline in the average 5-year cost of market financing continued. The latter reached 1.08%, marking a decrease of 88 basis points compared to the peak reached in March.
The growth in the financing of non-financial corporations is nearly stable (+12.9% over one year in July after +13.1% in June). The annual growth rate of market debt decreased in July, at +13.5% (down from +14.7% in June). Bank lending grew by +12.6% on a year-over-year basis.
The recent rise in non-financial corporations debt is accompanied by an increase in their cash flow.
Annual growth rate, by type of financing (in %)
Average cost of financing (in %)
Source and calculations : General Directorate of Statistics, Economics and International
Composition of non-financial corporate debt
The average cost of bank loans to non-financial corporations is computed using the monthly interest rate applied by French banks. This indicator only covers euro-denominated loans with a term of at least one year and with an initial amount of at least one million euros. It excludes revolving term facilities and overdratfs.
The average cost of market financing is calculated on the basis of month-end actuarial rates of return of alive securities. It only covers euro-denominated securities with an initial maturity longer than one year and with a fixed coupon rate. A specific calibration process using the yield curve is performed to align different maturities with a constant 5-year maturity. The average cost of market financing calculation methodology excludes extreme values.
The average cost of bank loans and the average cost of market financing cannot be directly compared since they often differ in their maturity horizon.
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Financing of non-financial corporations
Published on Wednesday, September 9, 2020