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<\/p>\nThe ECB euro area bank lending survey shows that banks are tightening their credit standards for both corporates and households. While household demand for loans has fallen sharply, corporate demand has remained relatively stable.<\/p>\n
The factors driving corporate demand have changed. While borrowing related to fixed investment and to mergers and acquisitions (M&A) rose until the spring of 2022, the reverse is now true. In parallel, financing needs related to working capital requirements (WCR) have risen significantly in the past year. However, for the time being and unlike in 2020, firms do not appear to be restructuring debt.<\/p>\n
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Both banks and companies alike are becoming more cautious despite net demand for loans remaining at a reasonable level. While working capital financing usually moves in the same direction as the pro-cyclical components of fixed investment and M&A, WCR financing is currently rising significantly while the other factors are falling. The ECB survey also reveals that short-term loans (less than 12\u00a0months) are accounting for an increasing share of overall loan demand. This is a signal that inflated production costs are forcing firms to devote more funds to maintaining their operations.<\/p>\n
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The opinion expressed above is dated October 28th, 2022 and is subject to change.<\/p>\n
See also: https:\/\/latribune.lazardfreresgestion.fr\/en\/small-caps-a-source-of-opportunity\/<\/p>\n
***<\/p>\n
This document is not pre-contractual or contractual in nature. It is provided for information purposes. The analyses and descriptions contained in this document shall not be interpreted as being advice or recommendations on the part of Lazard Fr\u00e8res Gestion SAS. This document does not constitute an offer or invitation to purchase or sell, nor an encouragement to invest. This document is the intellectual property of Lazard Fr\u00e8res Gestion SAS. LAZARD FRERES GESTION \u2013 a simplified joint stock company with share capital of \u20ac14,487,500 \u2013 Paris Trade and Companies Registry No. 352 213 599. 25, RUE DE COURCELLES \u2013 75008 PARIS, FRANCE<\/p>\n","protected":false},"excerpt":{"rendered":"
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