Bonds issuance: a financing mean compensating for difficult stock markets and more and more limited access to credit (re)financing

As we wrote in our precedent newsletters, the volatility of the stock markets together with tightened loans (re) financing conditions makes (re)financing operations for private or public SME’s very difficult and expensive.

Indeed, constraining regulations imposed to financial institutions in order to respect their equity ratios lead to a massive reduction of their balance sheet’s size and will logically lead them to lower the loans volume they grant to SME’s. Besides, European and US governments are still facing the crisis of their sovereign debts. Recession becoming more and more a reality, investor’s distrust towards stocks markets grows.

Bonds issuances, which have been very popular lately, shall then constitute THE financing mean for SME’s. More particularly, convertible bonds, which offer a controlled access to the issuer’s equity, reduce the coupon cost compared to a simple bonds issuance, close to the cost of a bank loan.

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