INDEBTEDNESS OF FRENCH COMPANIES AND THE COVID-19 CRISIS

The transmission of monetary policy decisions to the French economy in recent years has been in line with expectations; with a very accommodating monetary policy, the indebtedness of private economic agents has risen rapidly with a significant fall in its cost; French banks have offset the impact on their net banking income of the squeeze on their interest margins with a volume effect. This trend, which was broadly similar among households and non-financial corporations (NFCs), remained however singular in the euro zone, with the debt of French economic agents increasing significantly. In the case of non-financial corporations, recourse to debt was particularly pronounced, even though this trend was accompanied by an increase in the holding of cash. The health crisis accentuated these trends. This one-off acceleration creates a high potential for refinancing debt and transferring risk through securitisation. It also makes the question of rebalancing the financing of French companies between debt and equity all the more sensitive. In this context, private equity funds, which have very significant cash to invest, could play an important role in the exit from the crisis.