High debt becomes a risk for Dax companies

Dusseldorf The war in Ukraine is disrupting production and supply chains, pushing energy prices to record highs and likely to significantly weaken the global economy. The large German companies are entering this new crisis with high levels of debt: According to Handelsblatt calculations, the net financial debt of the Dax companies has risen from 140 to 273 billion euros within ten years.

As long as interest rates were close to zero, that wasn’t a problem. But the turnaround in interest rates is causing the cost of new loans to rise drastically. According to Bundesbank statistics, corporate bonds are currently yielding an average of 1.88 percent. Last August it was 0.7 percent.

“Many companies have made themselves comfortable in the low-interest environment, and they have to get out of this attitude,” says balance sheet expert Kai Lehmann from asset manager Flossbach von Storch.

With net financial liabilities – i.e. total debt less cash – of 132 billion euros, Deutsche Telekom has the highest level of debt. That is almost ten billion euros more than a year ago.