Bad Loans in Europe Climb to 15%

Transactions of leveraged buyout (acquisitions on loans) could contribute to an increase in the number of bad loans by companies to a record level of 14.7% this year, according to agency Standard & Poor’s, quoted by Bloomberg.

Between 90 and 112 European companies in the category of those who made speculative transactions monitored by S&P could come in incapacity to pay this year, according to a report released recently by the company from New York.

Previous estimates indicated a level of 11.1%. Bad loans will be “considerably more” among the companies that made acquisitions in debt, according to S&P.“Foresee the risk considering the fact that these lenders have no appetite or capacity to provide further funding to help them pass this period of decline” shown in the rating agency analysts.

At the end of the fiscal year 2010-2011, “Refinancing can be very difficult to insure” for companies unable to pay its debt to maturity, is shown in the report.

In 2010, the level of bad loans could be similar to that of this year, estimated analysts S&P. Companies from industries that base on consumer spending, such as retail food and non-manufacturers of automobiles, will remain under pressure, while commercial property sector could attend a “severe correction”; shows analysts S&P.