Expanded German Spending to be Private Credit Supportive
Services, Consumers, IndustrialsSummary
This commentary, Expanded German Spending to be Private Credit Supportive, examines how:
-- The significant loosening of Germany's constitutional debt restriction will favourably impact private companies in the defense and IT services supply chains with some trickle-down effect into the broader SME space.
-- Near term, we expect private lenders to remain on the sidelines amid persistent uncertainty and volatility in the market.
-- Longer term, we believe that the German fiscal policy changes will begin to attract more private equity capital, with the overall share of private lending likely to remain small.
"The positive effects of additional government spending may boost tender offers for German middle market companies that serve the defense, IT services, and infrastructure sectors", said Andrea Petroczi-Urban, Assistant Vice President, Private Corporate Credit. "These firms may see revenue improvements, which will translate into better earnings, if costs are managed well", added Petroczi-Urban.
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