European corporate credit to remain fragile, says S&P

“Without any real growth in consumption and investment, we see little reason to expect a dramatic upturn in credit quality among European issuers in 2004,” said Barbara Ridpath, S&P’s chief credit officer for Europe.

The rating agency added that against the backdrop of slowly improving but still weak credit quality, there has been a “remarkable” rebound in bond issuance by European companies.

“Strong demand from yield-hungry investors has led to a general fall in credit spreads and an increase in issuance, despite the fact that the underlying credit fundamentals in Europe remain fragile,” Ridpath said. “Issuance should remain reasonably healthy in 2004.”