Spain | The rise and fall of corporate debt

Following several years of relative calm, global debt has been steadily growing since the 2008 financial crisis. Aside from the question of public debt, corporate debt grew sharply from 73% of GDP in 2008 to peak at 102% in 2020, at the height of the pandemic.

Key points

• Key points:
• At the global level, the increase in corporate debt issuing activity has been a key component of overall borrowing since 2008. Regional dynamics are also relevant, with China and the United States being the main drivers of corporate debt growth.
• In Spain, corporate indebtedness peaked in 2010, when it hit 120% of GDP in consolidated terms, 42 percentage points higher than companies in the wider eurozone.
• Thirteen years later, Spanish companies have managed to almost halve this figure, recording a 65% debt to GDP ratio in the third quarter of 2023, a level not seen since 2002 and 3 percentage points below the eurozone average.
• The deleveraging process has been intense across most sectors of the economy, though especially so in real estate and construction. In terms of gross value added (GVA), companies in these two sectors have dropped from a 225% debt ratio in 2010 to 49% in 2023.
• According to the ECB’s biannual SAFE survey, Spanish companies seek external financing mainly to meet their working capital and inventory needs, whereas German, French or Italian companies do so predominantly to fund their PP&E investments.

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