Today's Coming Crisis Movie

Friday, October 5, 2012

Debt-laden companies cashing in on ECB pledge

(Reuters) - Heavily indebted euro zone firms are reaping the benefits of the European Central Bank's pledge to pull the region out of crisis, allowing them to borrow more cheaply and draw investors back into their shares.

In the aftermath of the 2008 credit crunch, Portuguese power company EDP (EDP.LS) and Italian peer Terna (TRN.MI) were among the companies refinancing large debt burdens in the face of a complete collapse in faith in borrowers.

That has changed, firstly with the sovereign debt crisis - which made banks and governments the main sources of lenders' distrust - and now with central banks' moves to head off the euro zone's turmoil and support economies with ultra-low official interest rates.

The result is a boom in corporate borrowing which drove the largest monthly issuance ever of "high-yielding" corporate bonds in September. Read More