Sign up to create alerts for Instruments,
Economic Events and content by followed authors
Free Sign Up Already have an account? Sign In
Quotes
All Instrument Types
- All Instrument Types
- Indices
- Equities
- ETFs
- Funds
- Commodities
- Currencies
- Crypto
- Bonds
- Certificates
Please try another search
💎 Access the Market Tools Trusted by Thousands of Investors Get Started
Weil distress index shows UK companies at highest level since June 2020
Published Mar 23, 2023 01:59PM ET
2/2
© Reuters. FILE PHOTO: View at the London skyline from the16th floor of the new European Bank for Reconstruction and Development (EBRD) in London, Britain March 23, 2023. Kirsty Wigglesworth/Pool via REUTERS/File Photo
2/2
© Reuters. FILE PHOTO: View at the London skyline from the16th floor of the new European Bank for Reconstruction and Development (EBRD) in London, Britain March 23, 2023. Kirsty Wigglesworth/Pool via REUTERS/File Photo
2/2
By Chiara Elisei
LONDON (Reuters) - Corporate distress levels in Britain accelerated in the three months to February to their highest since June 2020, an index compiled by law firm Weil Gotshal & Manges shows.
But corporate distress across other big European countries slowed marginally as expectations of a deep and prolonged recession eased according to the index, which measures the number of companies facing difficulties in paying their debt.
The study, which aggregates data from more than 3,750 listed companies and financial market indicators, is tracked against default rates and shows a roughly 12 month-lag before distressed levels translate into actual default rates.
This suggests that default rates will start rising soon. S&P expects default rates to reach 3.75% and 3.25% in the United States and Europe, respectively by September, more than double the 1.6% and 1.4% in September 2022.
Weil's quarterly European Distress Index rose to 3.1 in the quarter to February, versus 3.0 in November. The UK Distress Index, a component of the European index, hit a 6.7 peak versus 3.5 the quarter before.
A sub-index showed that distress in the European real estate sector was stable at 4.7 versus the prior quarter, but remained higher than a year before, when it was negative 2.4.
"The direction of travel is moving away from Europe towards the UK, which is beginning to look much more at risk due to higher inflation as well as increased operating and input costs," said Andrew Wilkinson, senior partner and co-head of Weil's London restructuring practice.
Real estate across Europe remains the most distressed sector by some margin, the index showed.
Weil said that in Britain, the housing sector is only just recovering from turmoil unleashed by the government's mini-budget in September, and continues to struggle.
The mini-budget sparked a surge in government borrowing costs and mortgage rates.
The recent collapse in the U.S. of Silicon Valley Bank and rescue of Credit Suisse by UBS in Europe have also put the banking sector under the spotlight.
"The financial system certainly has some elements of fragility but we do not expect another banking or sovereign debt crisis," Wilkinson said.
Related Articles
Add Chart to Comment
Confirm Block
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.
Report this comment
I feel that this comment is:
Comment flagged
Thank You!
Your report has been sent to our moderators for review
Add a Comment
We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
Enrich the conversation, don’t trash it.
Stay focused and on track. Only post material that’s relevant to the topic being discussed.
Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.