INVESTMENT FINANCE BEYOND BANK DEBT: A FRENCH EXCEPTION? JOINT - - PowerPoint PPT Presentation

INVESTMENT FINANCE BEYOND BANK DEBT: A FRENCH EXCEPTION?

JOINT BDF/EIB CONFERENCE

OLIVIER GARNIER DIRECTOR GENERAL – ECONOMICS AND INTERNATIONAL RELATIONS

3 MAY 2018

GLOBAL TREND: CORPORATE ‘SAVING GLUT’…

1

Source: Chen-Karabarbounis-Neiman (2017)

…RESULTING FROM THE FALL IN THE LABOUR SHARE OF GVA

2

Source: Chen-Karabarbounis-Neiman (2017)

US: DEBT PRIMARILY FINANCES SHARE BUYBACKS RATHER THAN CAPEX (WHICH IS FINANCED BY INTERNAL FUNDS)

3

• 800
• 600
• 400
• 200

200 400 600 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Loans Debt Securities Corporate Equities

US Nonfinancial Corporate Business: net increase in liabilities

( 4-Q cumulated flows, in USD Bn)

20 40 60 80 100 120 140 160

1990 1993 1996 1999 2002 2005 2008 2011 2014 2017

US: NFC total debt & equities

(outstanding amounts, as % of GDP)

Equities Total Debt (Loans + Securities)

FRANCE: AMONG THE VERY FEW ADVANCED ECONOMIES WHERE NFCS REMAIN NET BORROWERS

4

• 20
• 15
• 10
• 5

5 10 15 2000Q1 2001Q1 2002Q1 2003Q1 2004Q1 2005Q1 2006Q1 2007Q1 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1 2014Q1 2015Q1 2016Q1 2017Q1 DE ES FR IT UK

NFCs net lending/net borrowing (% of NFC GVA, 4qms)

Source : Eurostat

NFC INVESTMENT AND SAVING: GERMANY VS. FRANCE

5

Non Financial Corporate sector saving and investment rates (as % of value added)

Source: Eurostat

Germany France

15% 16% 17% 18% 19% 20% 21% 22% 23% 24% 15% 16% 17% 18% 19% 20% 21% 22% 23% 24% 2000 2002 2004 2006 2008 2010 2012 2014 2016 NFC investment rate (% VA) NFC savings rate (% VA) 15% 16% 17% 18% 19% 20% 21% 22% 23% 24% 15% 16% 17% 18% 19% 20% 21% 22% 23% 24% 2000 2002 2004 2006 2008 2010 2012 2014 2016 NFC investment rate (% VA) NFC savings rate (% VA)

FRANCE: NFC DEBT RATIO HAS BEEN CONTINUING TO RISE IN THE AFTERMATH OF THE GREAT FINANCIAL CRISIS

6

Source: Banque de France. Last observation: 2017 Q3 20 30 40 50 60 70 80 90 100 110 120

Nonfinancial Corporate Debt/GDP (%)

Germany Spain France Euro area Italy

NFC Debt/GDP

Cumulated changes (in pp)

• 8.7

20.0 22.2 14.3 16.4 0.2

• 39.4

11.3

• 1.7
• 9.5
• 50
• 40
• 30
• 20
• 10

10 20 30 Germany Spain France Euro area Italy Q3 2017 / Q1 2011 Q3 2017 / Q1 2000

THE DISINTERMEDIATION OF NFC DEBT IS MUCH MORE ADVANCED IN FRANCE THAN IN THE REST OF THE EURO AREA

7

Outstanding bonds (€ bn)

Feb 2018

Share of total euro area market (%)

Feb 2018

Share of bonds in total NFC debt (%)

Q3 2017

Germany 149 14 13 France 495 47 30 Italy 131 12 11 Spain 40 4 4 Euro area 1060 100 15

EA Non-financial corporate bonds outstanding

NFC EQUITY FINANCING IS MORE DEVELOPED IN FRANCE THAN IN THE REST OF THE EA, BUT HAS ROOM TO EXPAND

8

40 60 80 100 120 140 1999Q4 2001Q4 2003Q4 2005Q4 2007Q4 2009Q4 2011Q4 2013Q4 2015Q4 2017Q4

Nonfinancial Corporate Equity

(% of GDP)

France EA US

FRANCE: SMES HAVE SIGNIFICANTLY DELEVERAGED OVER THE PAST RECENT YEARS

9

France : Nonfinancial Corporate Gross Debt to Equity ratios

in % (by size)

Source: Banque de France, FIBEN database, november 2017 80 90 100 110 120 130 140 150 160 170 1999 2001 2003 2005 2007 2009 2011 2013 2015 SME MID-TIER LARGE OVERALL