HAPPY EASTER EUROBOND

HAPPY EASTER EUROBOND

In view of the recent difficulties that most European countries are going through due to the well-known COVID-19 Pandemic, the head of government of most affected countries (like Italy, France, Spain) are calling aloud and rightly the solidarity that would subsist on being able to use funds for companies in order to stem/attenuate as much as possible the effects of the economic crisis that are inevitably still unknown to most.

However, from an economic and financial point of view, there are variables that are difficult to assess but must still be considered in any EuroBond issueing, which by the way will inevitably impact savings of private investors.

In addition, the EuroBond issuing in the complete absence of a common and transparent European credit risk control system would inevitably engender the vulnerability of individual countries, especially those with a high amount of debt, since the expected reduction in GDP growth that will be emerge from COVID-19 crisis will thus increase interest on the debt and consequently also the "spread".

Moreover, what will happen to enterprises if will be forced to increase their financial leverage in order to get new debt-financing-liquidity levelheaded through EuroBond issuing ? increasing their credit-risk, stressing their financial sustainability ?

And finally what will be the guarantees and the entities that adequately cover the risks of the new  Eurobond plan ? Each single Member states or the overall EU Solidarity ?

 

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