Ovetii Warns Creditors could be at Risk from Indebted Blue-Chips
Released on: October 27, 2007, 4:30 pm
Press Release Author: Biz-24
Industry: Financial
Press Release Summary: According to new research by Ovetii, some of Europe\'s largest companies are in danger of breaching their debt covenants and may increase the risk borne by their creditors.
Press Release Body: According to a source close to the Athens based firm, of non-financial European companies with a market capitalization higher than $500 million, as many as 28 could breach their covenants as a result of their deep exposure to debt and poor liquidity.
The source went on to say that research by Ovetii had revealed that banks and companies have apparently struggled to raise capital to repay debt since August because of the credit squeeze, which effectively froze the market for asset-backed commercial paper.
Debt covenants are agreements between borrowers and lenders that the borrower operate within certain limits. A breach will increase the risk to creditors of non-repayments and usually leads to a renegotiation of debt on terms less favourable to the borrower.
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