German Corporates Well Positioned to Weather Any Downturn


German growth numbers are at a five-year low and a recession looks increasingly likely.  German exports are still growing but the rate has been hit by China‚Äôs internal and external economic challenges, as well more global trade-related problems.  The global auto sector is facing a pause in demand as technology pivots towards electric cars, and Brexit-related uncertainty has had a negative impact on manufacturing related output.

As the top chart below shows, a sample of 195 German corporates are typically of high credit quality; the majority are in the bbb category but the aa category is the second largest.  The bottom chart shows a modest but consistent improvement in German Corporate credit quality over the past two years.  This improvement may plateau or even reverse if the economy goes through a protracted downturn, but bank-sourced credit data from Credit Benchmark suggests that the German Corporate sector is strongly positioned to weather this.

 

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Credit Benchmark brings together internal credit risk views from over 40 leading global financial institutions. The contributions are anonymized, aggregated, and published in the form of consensus ratings and aggregate analytics to provide an independent, real-world perspective of credit risk.
Risk and investment professionals at banks, insurance companies, asset managers and other financial firms use the data for insights into the unrated, monitoring and alerting within their portfolios, benchmarking, assessing and analyzing trends, and fulfilling regulatory requirements and capital.