Stashing the cash
European corporates have spent the past couple of years building up their cashreserves, but the million-dollar question is what are they going to do with it all?
Since the cash-strapped days of 2002, the cash on European company balance sheets has been growing at a rate of 10–15% each year. As UBS’s chart shows, cash as a percentage of total assets on corporates’ balance sheets is predicted to end the year at around 11%, compared with 8.5% in 2002. UBS also predicts the ratio will increase further to 12.6% by the end of next year: a position that George Bory, head of credit strategy at UBS in London, believes “does not seem sustainable going forward”.
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