Spanish non-financial corporations’ debt since the start of the crisis. A disaggregated analysis

During the expansionary phase before the crisis began, there was a marked increase in Spanish non-financial corporations’ indebtedness. This led debt, in terms of GDP, to stand at very high levels both historically and in comparison with other developed countries. The need to redress the excessive volume of these liabilities, along with the lower demand for funds attributable to the decline in investment plans and tighter supply-side financing conditions, first prompted a swift slowdown in corporations’ borrowed funds and later led to an actual contraction in these liabilities. Specifically, the financial accounts information shows how the level of debt in the non-financial corporations sector peaked in 2009 Q2. The cumulative fall from then to end-2011 stands at 4%. This trend has continued in 2012, raising the cumulative decline to 7.4% according to figures for 2012 Q3 (the latest available). This article analyses debt levels in the non-financial corporations sector in recent years from a microeconomic perspective, with a view to identifying potentially different behavioural patterns (by sector, size and based on the degree of leverage) that cannot be detected in the aggregate information. It also studies to what extent debt levels may affect corporations’ employment and investment decisions. To do so, it uses the Central Balance Sheet Data Office’s CBA and CBB databases, from which two samples of corporations have been constructed. The first comprises approximately 180,000 corporations, common to the years 2007 to 2010. For 2011 (the latest year available) a second aggregate has been prepared with those corporations which, having already sent information for that year, also form part of the previous group. In this case the number of corporations is substantially lower (50,000), as it is in a year which is still considered open and for which, therefore, data are not yet being reported. In order to correct the changes in level associated with the different composition of the two samples, the indicators used have been appropriately spliced in this latter year. Furthermore, corporations belonging to the “holdings” sector have been excluded: on one hand, due to their scant significance for the scope of this study, which is more focused on analysing debt developments in the main Spanish productive sectors; and on the other, to the attempt to avoid potential duplications arising from cross-lending between corporations in the same group. Following this introduction, the article comprises four sections. Section 2 describes developments in corporations’ debt and leverage ratios, breaking these down by sector and size. Section 3 analyses the course of these variables on the basis of the corporations’ debt levels at the start of the period under study. In the fourth section, a study is made of the extent to which the degree of leverage of the corporations has affected their employment and investment decisions. Finally, section 5 draws the main conclusions.