US corporations rely especially on financial markets, i.e. financing via corporate bonds. On the contrary corporations in the Eurozone are heavily dependent on bank loans.
Source: International Monetary Fund (GFSR) October 2019, DB Global Research
Structure of corporate debt in the US and the Eurozone is very different. On the contrary corporations in the Eurozone are heavily dependent on bank loans. In the US corporate bonds have 67 % share on total corporate financing while in the Eurozone only 18 %. In the US bank loans have a share of just 19 % while in the Eurozone 80 %. Structure of corporate financing is therefore on both sides of the Atlantic very different and corporations from the Eurozone are heavily dependent on banks and thus their health.
Michal Stupavský
investment strategist