By Lucy Raitano LONDON (Reuters) -Corporate distress levels in Europe rose to a nine-month high in the three months to the end of May, an index compiled by law firm Weil, Gotshal & Manges shows,
European Corporate Distress Index Hits Highest Level in Nine Months
By Lucy Raitano
LONDON (Reuters) -Corporate distress levels in Europe rose to a nine-month high in the three months to the end of May, an index compiled by law firm Weil, Gotshal & Manges shows, driven by an uncertain economic outlook hampered by U.S. trade and geopolitical risks.
The Weil European Distress Index (WEDI) uses data from more than 3,750 listed European companies to monitor 16 indicators reflecting symptoms of corporate distress while considering metrics such as liquidity, profitability, risk and valuation.
The index rose to 4.1 from 3.8 at the end of the previous three-month period, suggesting increased probability of higher default rates on corporate debt.
Distress among retail and consumer goods businesses climbed to its highest since September 2009, the WEDI quarterly report showed. The sectoral downturn has been driven by factors such as tight credit conditions and weakening consumer demand, the report said.
Germany remained the most distressed market in Europe with levels rising to their highest since May 2020, when the global economy was ravaged by the COVID-19 pandemic. Europe's biggest economy has contracted for two straight years, though massive fiscal stimulus has boosted confidence in its growth outlook.
Weil also flagged downgrades to Europe's growth outlook as well as elevated geopolitical uncertainty as factors contributing to rising corporate distress.
(Reporting by Lucy RaitanoEditing by Dhara Ranasinghe and David Goodman)
