Analysts are predicting that 2009 will be the year that an increasing number of companies will default on their banking covenants – and there are already signs that newspaper groups could be among those to hit the rocks.
Credit ratings agency Standard & Poor’s predicts that at least 60 European companies will go back to their lenders and ask for more flexibility as revenues tumble and debt levels rise.
European newspaper publisher Mecom has already won a two-month reprieve from its lending banks and has until the end of February to get back within its covenants.
In an analysts’ note, quoted in today’s International Herald Tribune, Société Générale said: “We expect negotiations to become increasingly difficult as more issuers potentially run into problems over the course of 2009 in a weak economic environment.”
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