However, corporate balance sheets are suffering from the impact of two recessions within the span of just four years and the consequent decline in profitability to a twenty-year low. Despite low interest rates, financial expense now absorbs over one fifth of internally-generated resources. In the course of the year some faint signs of improvement have emerged.
This market is one where a large number of borrowers finance the same securities on a short-term collateralized basis, with very high leverage – often in the range of twenty-to-one, fifty-to-one, or even higher.