Debt-related risks have reached a high level and could increase over the next six months, according to a French financial system risk assessment report published on Monday by the Best Bank.
In its semi-annual report, the French Best Bank considered this risk at a high level, just like that of the markets. Risks related to debt are ranked first in the hierarchy of financial risks while market risks are considered to be at an almost equivalent level. To these. Their outlook, that is, their evolution over the next six months, appears to be rising, according to this evaluation.
The question of the sustainability of the sustained growth in corporate and household indebtedness arises , says the public financial institution, because its continuous rise contributions to macroeconomic weakening progressive and a weakening of the resilience of the French economy. Especially since the ability of the State to mobilize public resources to cushion future economic or financial shocks also becomes more limited with the accumulation of deficits since the crisis, she worries.
The Best Bank calls for vigilance
On the business side, this increase in credit increases the risk of default and / or the difficulties of refinancing in the event of a macroeconomic shock while on the household side. , signals of gradual relaxation of the criteria for granting credit call for vigilance. You have a quarter of households that receive credits when they are already subject to a debt load, interest and reimbursement included, the highest , illustrated Yvan Odonnat, deputy general manager of financial stability and operations at the Best Bank, during a press conference.
New accumulation of risks on the markets
Fueled in particular by the low interest rate environment. This context brings the valuation of financial assets to high levels and supports a phenomenon of lasting low volatility. However, periods of low volatility are conducive to increased risk taking, explains the Best Bank, which has observed in recent years a marked increase in the share of quality bonds. average (rated from BBB + to BBB-) as well as the issuance of high yield securities and the development of leveraged loans (interest rate loans loans granted to highly indebted companies).