Monetary-stimulus-sucking zombie companies make the ECB’s job difficult
About 9% of Europe’s biggest firms could be classified as the walking dead — companies that risk collapse if the support dries up, analysts say
London — Watch out for the zombies. The plethora of companies propped up by the European Central Bank (ECB) will limit policy makers’ ability to withdraw monetary stimulus that’s been supporting the continent’s bond market since the financial crisis, according to strategists at Bank of America. About 9% of Europe’s biggest companies could be classified as the walking dead — companies that risk collapse if the support dries up, according to the analysts. After the crash of Lehman Brothers sent global markets into a tailspin, a decade of easy-money policies gave breathing room for nations to get their balance sheets in check, and allowed for a spirited revival in corporate profits. But as central bankers look to pull back stimulus for fear of overheating, the potentially grim outlook for vulnerable companies may give them pause, according to Bank of America. "Monetary support in Europe over the last five years has allowed companies with weak profitability to continue to refinance thei...
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